Vehicle insurance, also known as auto insurance, car insurance, or motor insurance, is an insurance that is purchased for cars, trucks, and other vehicles. Its primary use is to provide guard against losses incurred as a result of traffic accidents and against liability that could be invited in an accident.
Public policy In many jurisdictions it is obligatory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car as well as the driver. However, the degree of each may differ greatly.
A 1994 study by Jeremy Jackson and Roger Blackman showed, consistent with the risk homeostasis theory that raised the accident costs caused large and significant fall in accident frequencies.
Coverage levels
Vehicle insurance can cover some or all of the following items:
• The insured party
• The insured vehicle
• Third parties (car and people)
• In some States coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto accident
• Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or accident damage independently.
Basis of premium charges Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company in accordance to a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverage than on mandatory liability coverage.