Vehicle insurance provides financial cover against damage caused to an insured automobile that occurs due to an accident, fire or theft. It also covers financial liability against damage caused to another person's property in the event of an accident. Nearly every country lays down specific rules to regulate vehicle insurance within its purview. The personal driving record, type and age of the vehicle, mileage and the area are the usual factors that determine policy premium. The extent of auto insurance cover also governs the premium amount.
Categories of Vehicle Insurance

Vehicle insurance can be divided into three broad categories on the basis of the cover.

Third Party Vehicle Insurance: Most countries require third party insurance by law. Many states have a specified minimum limit for third party insurance. It pays for the loss that occurred upon another person's property. This applies in case of an accident in which the insured vehicle is deemed responsible. It protects the policyholder against financial liability towards the affected party.

Third party insurance can be further divided into physical damage liability insurance and bodily injury liability insurance. Physical damage liability insurance pays for the repair of the damaged third party vehicle. Meanwhile, bodily injury liability insurance covers the medical expenses incurred by the third-party due to an accident