text: Originally posted on https://bonsaifinance.com/5-answers-common-personal-auto-insurance-questions-lc/
  Buying a car comes along with a strong sense of personal achievement and satisfaction. However, as soon as you drive off from the dealership, you face certain risks, like car theft and traffic accidents.
  This is why personal auto insurance is very important. In the event of an accident or theft, it protects against any resulting economic losses. It doesn’t come cheap, though. In 2016, the average annual auto insurance spend was $838.49, up 3.3 percent from 2015.
  If you’re a new car owner, you need to understand this insurance product in detail before signing up. In this article, we’re answering the 5 most common personal auto insurance questions.
  1. Do I Really Need Personal Auto Insurance?
  This is a common question among first-time car owners who are also not well-versed in the law.
  In most states, it’s a legal requirement to have personal car insurance in most states. In these states, driving without insurance will earn you steep fines or jail time, or both.
  But if you live in New Hampshire or Virginia, you can get away without purchasing any car insurance. Don’t celebrate, yet! These states, by law, require drivers to pay for any property loss or bodily injuries resulting from a car accident.
  Even if you have no legal obligation to insure your car, it’s not a smart thing to drive around without insurance. Yes, life is full of risks but some can be extremely costly. If you cause an accident and seriously injure other people, you could end up paying a six-figure sum in compensation.
  Get your personal car insured.
  2. What Is Included in an Auto Insurance Policy
  Although policies vary from provider to provider, you’ll typically get the following benefits.
  Bodily Injury Liability Per Person
  The insurer pays for the medical costs, lost wages and other related expenses of all the people you injure in an accident
  Personal Injury Protection
  The insurer pays for your medical expenses, lost wages and other costs resulting from an accident, as well as those of your passengers.
  Property Damage Liability
  If your car damages another driver’s vehicle during an accident or hits other physical properties (collision), the insurer will pay up for the damage
  Before purchasing any auto insurance policy, it’s necessary to consult a broker who will help you understand your benefits in greater detail.
  3. How Much Auto Insurance Do I Need?
  In states where it’s a legal requirement to have auto insurance, there is usually a minimum coverage amount.
  In Indiana, for instance, the minimum coverage is:
  - $25,000 bodily injury liability per person
  - $50,000 bodily injury liability per accident
  - $10,000 property damage liability per accident.
  This means that in the event of an accident involving another vehicle and its occupants, your insurer will pay up to $25,000 per injured person, up to a maximum of $50,000.
  Confused? Here is an example to illustrate this.
  Let’s say you injure two people in an accident. If each person needs $22,000 for medical expenses, the insurer will pay the entire $44,000, since it’s below the $5,000 limit per accident.
  However, if each person needs $30,000, the total compensation will hit $60,000, which is $10,000 above the $50,000 limit per accident. Consequently, the insurer will pay $50,000, but you will need to pay up the additional $10,000 from your pocket.
  It’s also important to note that Indiana doesn’t have a requirement for personal injuries, so you’ll take care of your own medical expenses.
  Evidently, there is a real possibility a minimum coverage may not be sufficient to cover all your liabilities after an accident.
  So, how much insurance is sufficient insurance?
  In truth, there is no exact answer to this question. It all depends on your exposure to risk.
  If you’re an adventurous driver who’s not afraid to push a car’s limits, you’re at a greater risk of getting into an accident and sustaining or causing serious injuries. You could also completely wreck the car.
  To be a safer side, purchase comprehensive auto insurance.
  4. Why Are My Premiums Higher Than Market Rates?
  To get personal auto insurance, you have to pay a premium.
  You definitely know this, but what you don’t know is why your preferred insurance carrier is asking you to pay more than what you were expecting to pay. Perhaps your friend pays $88 monthly, or the average monthly premium in your state is $88, but here you’re facing a $100 rate.
  Well, insurance companies classify drivers according to their level of risk. These categories are:
  - Preferred risk drivers
  - Standard risk drivers
  - High risk drivers
  Obviously, you can tell preferred and standard risk drivers pay cheaper premiums, while high risk drivers have the priciest.
  Now, there are a couple of factors that determine your classification. If you have caused multiple accidents and broken traffic codes, providers will consider you high risk. Other factors insurers look at include cost of the car, credit score and age.
  If you’re paying more than your friend or the average market rate, then your insurer considers you a high risk driver.
  5. What Is Accident Forgiveness?
  No matter how careful a driver you are, accidents do happen.
  Insurers know this, and they also know you want to save on auto insurance. That’s why they developed accident forgiveness programs, so that accidents that were otherwise out of your control — even if you were at fault — don’t drive up your premiums.
  Accident forgiveness programs are not created equal. Insurance companies have different procedures and qualification requirements.
  In general, though, you will get an at-fault accident forgiven if, leading to the accident, your driving record was squeaky clean. The accident will nonetheless stay on your driving record.
  Personal Auto Insurance Gives Your Peace of Mind
  When you hit the road, the last thing you want is an accident, but the risk is always there. While some accidents are minor and don’t even need insurance companies to step in, others can be serious, involving bad injuries and damage to properties.
  When this happens, it can be costly to settle all related costs on your own. But with a personal auto insurance policy, you won’t have to worry, because the policy covers your liabilities, or at least some of them.
  Thanks to this article, you now know more about this policy, and we trust you’re in a better position to make a sound decision about your car insurance needs.
  If you have any further questions, don’t hesitate to get in touch with us. We’re always pleased to help our readers!