Buying auto insurance is mandatory in several countries of the world and almost all states of the United States. Auto insurance protects the buyer from high expenses incurred while repairing the damages of a mishap to the car, or the area where it happened or even the other car or cars involved. It is required to be bought by law and in most cases you can buy insurance at the time of buying the car.

You can buy full coverage insurance which will pay you the expenses of all the damage work done. Or you can buy a third party insurance whereby the expenses incurred by the aggrieved party will be borne by the insurance company but you will have to pay for the damages to your vehicle. You can also insure your vehicle against fire or theft or damage by vandals.

In return for the insurance promised you have to pay a premium which is a fixed payment to be made at fixed intervals. The premium is decided at the time of buying the insurance. It depends on the amount of insurance money promised, the number of years it covers and in certain cases it also depends on the sex, age and other factors. Generally older people are supposed to be more careful while driving; hence their premiums may be different. Women are careful drivers while men and youngsters may be rash. Hence the premiums will depend on the age and the sex of the driver. If the driver has a clean record then the premium may not be very high but if his record is not good, or he has a hazardous driving habit, the premium may be more.

The usage of the vehicle is also taken into account when the premium is fixed. The premium is not mandated by the Government but depends on the above mentioned criteria. Once the premium is decided and the insurance bought, you have to be very regular in paying the premium otherwise the policy can lapse.

In the event of a mishap, you have to inform the insurance company immediately. After a detailed survey, they will decide on the insurance payment to be made to you for the damages and the repair of your vehicle. The insurance company may expect you to pay first and then they may reimburse or they may ask you to submit the bills and they will pay it directly. It depends on the insurance company and the state and the country you live in.

Not all car insurance policies cover you when you rent a vehicle. The policy typically will not extend coverage to friends or relatives unless they are listed on the policy.