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What and how do auto insurance work?

January 5, 2018
auto insurance work
If you have a car, have you ever had to use your insurance to realize that you do not cover your accident for some reason or another, today we tell you everything you need to know about car insurance.

 

1. What is auto insurance?

 

It is an insurance contract that protects your car against risks such as: collisions, total theft, injury to occupants and damage to third parties in your person and your property in the event of vehicular accidents.

 

This type of insurance covers losses to the property of the insured as well as losses to the property of third parties when the insured is responsible as a result of owning or driving a car.

 

2. What are the parts involved in car insurance?

 

There are three parts to the car insurance policy or contract:

 

The Contracting Party: the person who pays for the services of an insurer,
The beneficiary: The person who enjoys the services offered by the insurer, and
The insurer: The company that will offer the services in case of an accident.

3. What type of coverage usually exists in car insurance?

Each insurer offers different types of coverages, however the most common packages, so to call it in some way, are the following:
TOTAL Vehicle theft: Protects you in case of theft.
CIVIL Liability: Covers all the responsibilities that may be incurred by the owner or any person who with his authorization uses the insured vehicle, for the material damage caused to third parties in his property, bodily injury or death to third parties and compensation for moral damage that is legally determined. The expenses payable by the insured should also be covered in the event of a civil lawsuit being followed against him for civil liability.
  • Medical expenses.-it covers the payment of medical expenses for bodily injuries of the insured and of the other occupants of the vehicle, in traffic accidents.
  • Legal defense and Counseling. – This service includes the insurance companies, it consists of the assistance of lawyers in case of accidents or of total theft of the car.
  • Some examples of the services covered are the following: To process the probation of the insured during the trial, release of the vehicle, processing of necessary bails and realization of the expenses payments except the administrative fines.
  • Property damage.-Covers all damage and/or material losses suffered by the vehicle as a result of circumstances that cover your insurance policy.

4. What are the most common causes for which you do not pay insurance?

  • The most logical thing is that the damage your vehicle received was not covered as a risk in your insurance policy, so you should check it to know first and not cover.
  • When the driver is not licensed or allowed to drive.
  • Mechanical failures of your car that are directly related to the lack of resistance of your parts, unless they are covered within your policy.
  • Loss or damage to the bottom of your vehicle for traveling off roads or in bad roads.
  • If the driver is in a state of drunkenness or under the influence of drugs.

5. Do I have to give a new policy if extend my insurance?

When you request any modification in the conditions of your vehicle insurance policy, the insurer must give you a document called “endorsement”, in which all the modifications are made to make them valid. Let in simpler words, it’s like extending your insurance.

auto insurance work

6. What are the forms of compensation in the case of using vehicle insurance?

  • In case of loss, the indemnity will be paid to you at commercial value of the vehicle, unless you have contracted a policy at replacement value.
  • In case of theft or total loss, the indemnity will be made based on its commercial value.
  • In order for the insurer to be able to process the payment and/or repair of your vehicle, it is necessary to deliver the documentation that you need.

7. What does the commercial value of a vehicle mean?

 

It means the value of your vehicle which contemplates the depreciation of the same in accordance with the books handled by the insurers for such purposes.

 

In order for the company to be able to process the payment and/or reparations caused by the damages, it is necessary that you give all the documentation and information that it requires, or failing that, that you carry out the necessary procedures for the replacement of such documents, because Without them they will not be able to give you the corresponding compensation.

 

8. What is the term of validity?

 

It is the period of validity of a vehicle policy during which the insurer recognizes its responsibility to cover the expenses incurred by a casualty. Depending on the type of insurance you contract, the validity can be bimonthly, quarterly, semi-annually or yearly.

 

9. How long do you have to pay your insurance policy?

 

Depending on the type of insurance you contract and the form of payment you choose (bimonthly, semi-annually, yearly, etc). You have 30 days to make the payment of your policy, as well as to make clarifications on the content of it.

10. Is my car still protected in case of an accident one day after I have not paid my insurance policy?

This is something very important, as I told you in the previous point, you have 30 days to pay your policy, however, if on the 31st day you hired your policy and you have not paid, you happen an accident, your car will not be protected against any accident.

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