What Is Auto Insurance?

Auto insurance otherwise known as automobile insurance, car insurance, or motor vehicle insurance is financial protection for you when you are injured or your car is damaged or you are sued as a result of a car accident. “Financial protection” or indemnification is the process by which an insurer indemnifies an insured for a loss for which they are covered.

For example, if you insure your vehicle with an insurance provider and get into an accident that causes damage to your car than your insurance company will pay for it provided you have adequate coverage. In this case, you would either need to be held not at-fault for the accident or have physical damage coverage, better known as full coverage, to receive indemnification.

What is an Auto Insurance Quote?

An auto insurance quote is how much an insurance company is charging to insure you and your vehicle. When you hear the phrase “get a quote”. It simply means a request for the price of auto insurance.

Where Do I Buy Auto Insurance From?

There are two main ways to obtain auto insurance (1) through an insurance brokerage or (2) through an insurance company. An insurance brokerage is an independent company run by licensed brokers whose main job is to find and retain customers. Insurance brokerages are different than insurance companies in that they only sell the auto insurance and do not actually provide it. Brokerages instead can sell different types of insurance policies as most brokerages tend to work with many insurance companies. If you want to get an idea of how much different companies are charging you would contact a broker for a quote. Keep in mind, however, brokers only have contracts with a select few insurers and not all of them, so it is best to ask which companies your quote is coming from. Essentially, an insurance broker is similar to a real estate agent or a car salesmen in that they act as an adviser between you and the seller, in this case the insurance company.

The second way to buy insurance is directly from an insurance company. In this case, you would simply contact the insurance company for a quote and they would tell you how much they charge. This method can be time consuming because of the amount of insurance companies that exist. Some people prefer this method because they do not want to pay a commission to their broker. This is an unfounded reason as the insurance company pays the broker for making the sale just as the insurance company pays its employees for the same sale. From a consumer perspective all this shouldn’t really matter as your main concerns should be price and quality of customer service.

Which Insurance Companies Provide Auto Insurance?

There are probably over a hundred auto insurance companies in the United States alone. Some of the largest insurers include AllState, AIG, Liberty Mutual and AAA. There are also thousands if not more independent brokerages throughout the nation. For a larger list of insurance providers read All Auto Insurance Companies.

How Much Does Auto Insurance Cost?

Auto insurance rates vary from one company to another even for driver’s with similar characteristics known as a “risk profile”. Companies base their rates on a variety of factors such as number of accidents, number and severity of traffic convictions, age, gender, marital status, type of vehicle, and geographic location. As a result, the cost of your auto insurance can vary greatly from one insurer to the next, so it is best to shop around.

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