- Car dealers can purchase insurance for a driver and charge it to her if she does not have coverage.Red cars image by Catabu from Fotolia.com
Auto insurance coverage is mandatory for drivers of motor vehicles in the United States and its territories. This coverage protects the driver against claims that include damage to other vehicles in auto accidents and damage to buildings and structures into which the driver's vehicle collides. Auto insurance involves the driver paying a premium each month to an insurance company to continue coverage. - Coverage requirements include several categories of damage. Personal injury coverage applies to injuries that the driver causes to other people when an accident harms them. Body injury liability is applicable when the driver severely injures other people and permanently injures or kills them. Property coverage includes damage that the driver causes to property that others own, such as when a car crashes into a house or a restaurant and damages it. States set a minimum dollar value for coverage in each of these areas that a motor vehicle driver's policy must cover.
- Drivers who operate motor vehicles without insurance coverage are subject to penalties. Penalties may include the confiscation and sale of a car, as well as fines for the driver of the vehicle. Drivers can receive a driver's license suspension for a year or more, depending on the state, and may have to pay additional fees to restore their license. Penalties can be more severe when an uninsured driver causes an auto accident.
- Each state monitors insurance coverage for its drivers. According to the State of Oregon, the Oregon Department of Motor Vehicles randomly selects registrants who have driver's licenses in the State of Oregon. Oregon drivers receive a form in the mail asking them to verify their insurance coverage, including the name of the company providing the coverage and the amounts of coverage under the three categories of damage. Drivers are subject to penalties if they do not submit evidence that proves that they have acceptable insurance coverage.
- Auto insurance is a requirement when a person buys a car from a car dealership. The car is collateral for the loan when a person purchases a car from a dealership, and states can repossess vehicles if the driver cannot pay fines. According to the state of Wisconsin, the car seller may purchase a policy for the driver, known as forced coverage. Forced coverage includes greater fees and other costs than insurance that the driver purchases.
- Insurance companies decide whether to repair a car or to total it and sell the scrap. Insurance companies use information from various sources, such as the Blue Book that the National Auto Dealers Association publishes to determine what the car is worth. According to the state of Wisconsin, drivers may negotiate with insurance companies about the decision to repair a car, including information from other sources such as auto sales newsletters and car dealership advertisements.
