What Makes Auto Insurance So Different?


As a property and casualty insurance agent, you offer a host of complex products to consumers to protect them from financial loss. From homeowners’ insurance to renters’ insurance and more, your menu of insurance products is probably quite extensive. In many cases, auto insurance is one of the most misunderstood kinds of insurance because it differs from other sorts of coverage in several key ways.

How Car Insurance Differs From Other Coverage

While consumers may take comfort in the peace of mind that comes with knowing they have health and life insurance, they’re not required to carry those policies. Similarly, a homeowner may insure their home to satisfy the terms of their home loan, but the law doesn’t require residential property owners to have homeowners’ insurance. That’s often not the case when it comes to auto insurance, however.

In the majority of states, motorists are required to carry at least a bare minimum amount of car insurance to operate their vehicles legally. If a driver lives in a state that requires them to have car insurance, they’ll have to have bodily injury liability and property damage liability coverage. States often require motorists to have medical payments or personal injury protection as well as uninsured motorist coverage.

In states that don’t force drivers to purchase car insurance, financial responsibility laws normally exist. These laws don’t specifically require drivers to have auto insurance, but they do mandate that motorists must be able to prove they have the resources to pay the costs associated with an accident even if they weren’t at fault. Since many people don’t have sufficient cash or assets to cover the potential costs if they’re involved in an accident, they choose to purchase auto insurance as proof of their ability to pay.

Governing bodies requiring car owners to purchase auto insurance or requiring them to be in compliance with financial responsibility laws is arguably the most significant way car insurance differs from other kinds of insurance coverage. Here are some additional ways auto insurance stands out from other insurance policies:

  • Multiple Kinds of Protection: Car insurance involves multiple kinds of protection. In addition to the insurance that’s often required, motorists can also get collision, comprehensive, and glass coverage. Gap insurance, which pays the difference between a driver’s car loan balance and what their insurer pays if the person’s car is deemed a total loss due to theft or an accident, is also available. While states don’t compel drivers to carry collision or comprehensive insurance, many financial institutions will require drivers to buy these coverages if they finance or lease an automobile.
  • Popular Protection: While some consumers may choose to put off getting a life insurance policy, many drivers don’t have the luxury of waiting to purchase car insurance because they can’t legally drive without it in most of the country’s states. Since so many motorists are compelled to purchase auto insurance to operate their cars in compliance with the law, car insurance is the most widely held kind of insurance consumers can buy.
  • Time-Consuming: If you’ve been an insurance agent for some time, then you already know that car insurance is time-consuming by its very nature. Because so many drivers are required to have this kind of insurance, and countless others are motivated to purchase it by their state’s financial responsibility laws, agents are often busy trying to keep up with the demand for auto insurance.

Servicing policies to make sure they’re adequate for their clients’ current needs and handling claims also take up a considerable amount of time at busy agencies. While selling car insurance, servicing policies, and handling claims may absorb a lot of time, it’s time well spent because auto insurance can protect multiple parties from financial ruin at any given point.

Auto insurance is necessary and required for any driver. Ensuring you have a solid understanding of different policies and what they all mean can help you assist your clients in choosing the best insurance policy for their situation.