The purpose of the auto Insurance is to pay the damage of the vehicle insured or third party damage should an accident happened.

First we must determine who is the owner of the vehicle, if the vehicle is still under finance leasing, then you will not have a say on how much to insured for your vehicle as the finance company is rightfully the owner of the vehicle.

If a car is till under finance leasing, you have to go for comprehensive insurance where it cover all the parties involve in the accident.  The sum of insured is usually the market value of the vehicle.  Finance company usually has a guide line to determine the market value of the car.

You do have the option to purchase option insurance such as windshield insurance, natural disaster insurance etc.

If your car is not under the finance leasing anymore, then you can determine the amount that you want to insure.  For example your car value is $15,000, you may insure it for only $6,000 if you think the amount is sufficient for you to repair your car should an accident occurred.  Please take note that the sum of insured is the maximum payout from the insurance company should you make a claim if an accident occurred.

Auto Insurance generally divided into 2 major types (Depending on different country and states administration, it may carry different definition, terms and conditions. Please check with your Auto Insurance advisor before making buying).

1)     Non Comprehensive -  This type of insurance cover the basic needs to allow your car on the road, it only covers a third party liability damage but not your own car. That means should an accident happened and you are in fault, the other parties involved in the accident can carries out claims to your insurance company.  But you are not allowed to make any claim against your insurance company for the damage on your car.  However, if it is not your fault causing the accident, you can claim your vehicle damage from another party.  Non Comprehensive insurance will not cover in the even of your car being stolen or robbed.

2)     Comprehensive -  This type of insurance covered all the parties involved in the accident inclusive yourself regardless who caused the accident.  It is more expensive then the non comprehensive auto insurance.  Comprehensive Insurance auto Insurance will cover in the even of your car being stolen or robbed.

3)     Special purpose – Such as Wind Shield Insurance to protect against wind shield, act of god insurance to cover accident due to natural disaster ( flood, earthquake, typhoon ) or riot.