Interesting Facts About Auto Insurance

Interesting Facts About Auto Insurance
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Buying a car can represent freedom and excitement, but buying auto insurance more often suggests the very opposite. Auto insurance is essential to protect you and your vehicle, but it's a product you hope to never use once you buy it. Understanding how auto insurance works and why it's so important may help you feel better about buying it.

Many Factors

When you start shopping for auto insurance you may receive wildly different rates from the companies you contact. While initial quotes may or may not represent the actual cost of a policy, it's true that each insurance company has its own way of setting rates and the results can vary widely. Some companies rely more heavily on how long you've had a license, while others use your accident history, age and gender to decide what to charge. The type of car you drive, your zip code and whether you're married also factor into your rates with some insurance companies.

Car Insurance is as Old as Cars

Today, auto insurance is mandatory in countries around the world, but it began as a specialty product for early auto enthusiasts. In 1895,, an English insurance agent wrote out the first automobile liability insurance policy, and the first policy in the United States appeared three years later. Massachusetts was the first state to require all drivers to have insurance, starting in 1927.

It Can Save You Money

The right auto insurance policy can actually save you money while also protecting you from financial liability if you cause an accident. Driving without insurance is illegal in every state, which means you can be cited and fined even if you don't cause an accident. In addition, if you own a small business, you can deduct a percentage of your auto insurance costs when you file business taxes based on the amount of time you use your vehicle for work.

Temporary Policies Exist

While most auto insurance policies are open-ended and renew annually, insurance companies also offer temporary auto insurance. Temporary insurance doesn't rely on your driving record or accident history. Instead it applies broadly to the most common forms of damage so that you can meet your state's minimum requirements or protect yourself until you can get a long-term policy. Some situations where you might want to buy temporary coverage include while borrowing a friend's car for an extended period of time, while renting a car or when you buy a new car and want to drive it home from the dealership. Claims you make against your temporary insurance policy won't affect your regular auto insurance rates.