Automobile insurance, also known as
motor insurance
and auto insurance, is a form of contractual protection against losses associated
with the damage or theft of a motor vehicle. It is a very common form of insurance
and can cover loss and damages to a vehicle as well as cover a driver for liability.
Automobile insurance requires the customer to pay the
insurance company a monthly or yearly period for the duration of cover.
Insurance companies use actuarial science to calculate the risk of covering a particular
driver and vehicle. Things like the driver’s age, gender, location, driving history
and credit rating are used to generate data that approximates future claims. This
data is fairly accurate and is then used to set premiums.