How does auto insurance works 2025

How does auto insurance works



Okay, let’s be real – nobody actually reads their insurance policy until they’re standing in a parking lot staring at a dented fender. I learned this the hard way when I was 22 and thought "full coverage" meant, well, full coverage. (Spoiler: It doesn’t.) Here’s everything I wish someone had told me before I signed my first policy.


### **The Basics (Without the Insurance Jargon)**


Think of insurance like a really annoying safety net. You pay every month (that’s your "premium"), and in return:


- If you hit someone: Their repairs and medical bills get covered

- If someone hits you: Your car gets fixed (maybe)

- If a meteor lands on your car: You might get a check (depends on your policy)


*True story:* My neighbor’s kid threw a baseball through my rear window last summer. Turns out that falls under "comprehensive" coverage. Who knew?


### **The Coverage Types That Actually Matter**


**1. Liability – The "Don’t Sue Me" Policy**

This is the bare minimum your state requires. It covers:

- Other people’s hospital bills (if you cause the accident)

- Damage to other cars/property


*Fun fact:* In California, the minimum is $15,000 per person. That won’t even cover an ambulance ride these days.


**2. Collision – For When You Mess Up**

This covers your own car when you’re at fault. Important details:

- You choose your deductible ($500 is standard)

- Doesn’t cover your friend’s laptop that flew through the window


**3. Comprehensive – The "Weird Stuff" Coverage**

This handles:

- Theft (happened to my coworker – they took his stereo and gym shoes)

- Weather damage (hail, floods, etc.)

- Animal collisions (I once hit a deer that cost $3,200 to fix)


### 4**What Determines Your Rates (Besides Luck)**


Insurance companies look at:

- **Your driving record** (my 2018 speeding ticket still haunts me)

- **Your zip code** (city drivers pay more – thanks, traffic!)

- **Your car** (sports cars = $$$, 2005 Corolla = reasonable)

- **Your credit score** (which feels unfair but whatever)


*Personal rant:* Why do men under 25 pay more? My sister totaled two cars and still pays less than I did at her age.


###5 **The Claims Process – What Nobody Tells You**


When I backed into a parked BMW (don’t ask), here’s what actually happened:


1. **Panic phase** (30 minutes of deep breathing)

2. **Call to insurance** (hold music from 2005)

3. **Photo session** (took 58 pictures of a scratch)

4. **Waiting game** (adjuster called back 6 days later)

5. **Repair shuffle** (their "preferred" shop had a 3-week backlog)


*Lesson learned:* Always get rental coverage. I rode the bus for 19 days.


###6 **What Your Policy Definitely Doesn’t Cover**


After years of dumb questions to my agent:

- Regular maintenance (yes, even "full coverage" won’t pay for oil changes)

- Personal items stolen from your car (RIP my favorite jacket)

- Intentional damage (my cousin learned this after keying his ex’s car)

- Rideshare driving (unless you pay extra)


### 7**Picking the Right Policy Without Losing It**


Here’s my hard-earned advice:

1. **Higher deductibles = lower premiums** (but can you actually afford $1,000 tomorrow?)

2. **Bundle policies** (I saved 20% combining renters + auto)

3. **Ask about every discount** (good student, defensive driving, even some professions)

4. **Read reviews** – Some companies fight every claim (looking at you, [redacted])


###8 **Why This Matters More Than You Think**


Insurance isn’t just about following the law. When my friend got sued after a minor fender bender (his coverage was too low), he had to sell his motorcycle to pay the settlement.


Good insurance means:

- You’re not paying medical bills from your savings

- You’re not screwed if someone sues you

- You can actually get your car fixed when you need to


*Final thought:* My dad always said "drive like everyone’s trying to hit you." After 12 years on the road, I’d add: "And insure yourself like they will."


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