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Fault Based Auto Insurance Policy

A fault based auto insurance policy is a policy set up in a state that espouses a tort or fault based system. Most states around the country use some sort of fault system for auto insurance. In these states, the liable driver in an accident pays for the damages to the other vehicle and medical costs of the other driver. Some states use certain forms of a relative fault scheme where different drivers can both be found at fault to degrees and thus held fractionally responsible for the financial damages incurred in the accident.

As you look around for auto insurance coverage as a driver and begin comparing insurance quotes, you may notice the differences between the requirements in the laws of the various states as they relate to auto insurance. These requirements stipulate what kind or kinds of coverage are required and how much, and even how blame is meted out in accident circumstances. Legislators only set down the law and do not interpret it or administer it, so of course there are multiple levels of legal requirements to work through as drivers and residents of the different states in the U.S.

Auto Insurance Financial Responsibility

Virtually all states whether they are fault based or espouse some form of no fault in the auto insurance law require drivers to have auto insurance or to demonstrate financial responsibility in order to driver legally and to get their cars registered. The majority of states utilize some form of a fault based auto insurance system in which the insurance company representing the person who is found liable or at fault for an accident has to pay for the accident damages of the person who was not at fault.

There are still about a dozen states using the no fault system for auto insurance. But for the majority of Americans, fault based auto insurance is the norm and the law. Getting to know the basics of a fault based auto insurance policy is essential for drivers who live and operate their vehicles in these states. These details are not always obvious at all to anyone who does not work in the industry.

Insurance Policy Contract

An auto insurance policy is a contract between two parties. The first party is the driver or covered policy holder. The second party is the auto insurance company providing coverage to that driver. To keep things simple and general, the home and car insurance company or second party involved in an auto insurance contract agrees to insure the driver for the specific areas of coverage up to the stated limits as listed in the terms of the contractual agreement. These details will be listed in the declarations page of the policy, the front page that summarizes the important information contained in the policy. In exchange, the insured driver agrees to pay a certain predetermined premium, and pay it on time. If the money is in on time, they are obligated to cover the driver in an accident up to the limits of the policy.

Drivers Responsibilities in Auto Insurance

So drivers in these contractual agreements just have to pay their premiums and everything will be fine, right? Well, there are actually quite a few little details we must make sure to attend to as motorists and policy holders if we want to make sure we'll be covered in the event of an accident or some other claim. One of the most important responsibilities we have as drivers is to let our insurer know when an accident has happened, and to tell them promptly. Aside from the police and maybe a family member, your insurance company is one of the first contacts you need to get into touch with at the scene of an accident. They need to know as soon as possible that something has happened so that they can adequately represent your interests and get to the bottom of things. They may want to send an adjuster to the scene or do any number of things that they can only do if they are aware of what has happened.

If you are making a claim under a fault based auto insurance policy, you have other responsibilities as well. You need to cooperate with the insurer and assist with the progression of the claim in any way you can. You need to forward documents you receive regarding the claim, follow their instructions regarding getting a physical examination, and give the permission they need to access whatever medical records they might have to get of yours to keep things moving forward. As long as the insurance company is working cooperatively with you, there is no reason you shouldn't do the same with them. As an insured customer with a fault based auto insurance policy, you should work with your insurer whenever possible.


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