Auto Insurance: An Easy Guide to Understanding Auto Coverage


Auto Insurance is a service designed to provide you financial protection in the event that an accident happens with your vehicle. In most states, it is unlawful to drive your vehicle while you are uninsured, and it is also unlawful for insurance companies to sell insurance in a particular state without being licensed by that state’s board.

Auto Insurance Premiums are the amounts you have to pay in order to be insured on a policy. You have to pay a premium to the company, and in return, the company pays for your valid losses when an accident happens while you carry the policy.

Auto Insurance Policies are written by insurance companies, also known as carriers, to state your coverages. The policy specifies what the carrier will pay in the event that you have a valid loss. Most auto insurance policies are written for a 6 month or 1 year term, and monthly payment arrangements are usually available at a slightly extra cost.

Types of Auto Insurance Protection

  • Property Coverage: pays for damages to your vehicle.
  • Liability Coverage: pays for your legal responsibility when bodily injury or property damage is inflicted upon another motorist.
  • Medical Coverage: pays for medical treatment of bodily injuries; lost wages and funeral expenses may also be accounted for depending on your policy.

Auto Insurance Policies can include both collision and comprehensive protection. Collision protection refers to covering damages that occurred from a traffic accident. Comprehensive protection refers to covering damages that occurred outside of a traffic accident: damages acquired from vandalism, severe weather, or even theft of your vehicle.

Types of Auto Insurance Agencies

An insurance agency represents one or more insurance companies for a particular local area. The insurance agent is the person who sells policies for the carrier, and the agent works as arbitrator between the carrier and the customer.

  • Captive Agents: work as employees to sell insurance from one carrier.
  • Independent Agents: work as contractors to sell insurance from numerous carriers, tend to sell other financial products, such as wealth management.
  • Direct Writers: insurance companies that sell insurance directly through some type of automated media, where there is no insurance agent available.

Things You Should Know About Your Auto Insurance Policy

What Are Deductibles?

Auto Insurance Policies tend to have deductibles, also known as excess payments. An excess payment tends to occur when you make a claim on your policy. You have to pay the deductible amount in order to get the rest of the damages paid for by your company. The higher your deductible amount, the smaller your premium payments will be: this means you will pay a lot more when an accident happens and pay less on your premium.

How Are Premiums Determined?

Auto Insurance Premiums are strongly based on your driving history, as well as several other factors like age, credit rating, and the vehicle itself you are insuring. Too many accidents and or traffic tickets in a 3 to 5 year period will significantly affect the cost of your auto insurance premiums.

Illinois Auto Insurance Requirements

Financial Responsibility

A driver must establish financial responsibility in order to legally drive in a particular state, and many states accept bonds or deposits from motorists to secure that financial responsibility.

However in Illinois, you must prove your financial responsibility by having liability insurance.

Your liability insurance must cover the following:

    • $25,000 of coverage: for injury or death to one person in a single accident.
    • $50,000 of coverage: for injuries or deaths to more than one person in a single accident.
  • $20,000 of coverage: property damage.

If you still make payments on your auto, then your lending institution most likely requires additional insurance to protect their vested interest in a financed vehicle.

In order to help fully protect your assets, auto insurance experts will recommend more coverage in addition to liability insurance. Traffic accidents, especially ones resulting in bodily injury, are financially destructive to drivers with just the minimum of coverage.

Proof of Auto Insurance

Besides randomly selecting registered drivers to submit proof of insurance, the State of Illinois does not automatically know about your auto insurance coverage. Because of this, proof of insurance should be kept in your car at all times, and your insurance company should issue your proof of insurance on paper whenever you start or renew a policy.

Penalties for Driving Uninsured in Illinois

The following penalties describe what you may incur for driving uninsured or under-insured in the State of Illinois:

    • No Insurance Ticket Fine: Minimum $500
    • License Plates Suspended: Minimum $100 Re-Instatement Fee
  • Compounded Penalties for Repeat Offenders

Get Your Auto Insurance Quote Now

Get your auto insurance quote now online, or call 1-877-901-5544