Advertisements for auto insurance always stress the importance of buying enough coverage for you. But, not many tell you what exactly that amount is. You don’t have to be an expert in car insurance, but it definitely helps to understand the basics. This post covers some of the essential facts and falsehoods of car insurance, along with helpful tips on what to look for when shopping for coverage.
Why is Auto Insurance so Essential?
Car insurance can save you from financial ruin in some cases. Whether you were involved or caused a car accident, had your car vandalized or stolen, or had it damaged in a storm -your car insurance will be there to insure you for any repairs and injuries. Of course, there is also the matter of state requirements for drivers. 49 out of 50 states require their drivers to carry a certain amount of car insurance in order to be able to drive. They usually require liability insurance which covers any damage and injuries you cause to another driver and their car -often referred to as basic car insurance. Comprehensive and collision insurance can be added to your policy for full coverage, which overs protection against damage regardless of fault. Personal injury protection and uninsured motorist insurance can also be added on for more in-depth coverage.
Your Car Insurance Rates Depend on Your Amount of Coverage
As you can generally infer, basic car insurance with only liability coverage is cheaper than full coverage. Your insurance rates are the monthly cost in order to keep your policy active until its renewal time. They are often determined by several personal factors, along with the specifics of your car. Comprehensive coverage tends to be more expensive than collision coverage, while coverages like uninsured motorist insurance tend only to increase your premium by a small amount. Every auto insurance provider prices their insurance differently, so while you’re shopping around, you can compare them by gathering quotes from several insurers. You may be surprised when comparing local and national names.
The Factors That Determine Your Auto Insurance Rates
Every car insurance prices its policies differently, but they’re all looking at the same things. When it comes to you, they consider your age, driving history, marital status, credit score, and sometimes gender. They do this to assess your risk as a driver. The same is also done with your car as they look at its make, model, mileage, and age. An example would be that a younger driver with a sports car will have higher insurance rates than an older driver with a Sedan. That’s why it’s so important to be a safe driver with little to no markups on your history in a car that is reliable and hasn’t been in accidents. Finding the best rates requires some digging by getting quotes from at least three auto insurance companies.
Shopping With Multiple Car Insurance Companies
The cost of car insurance varies by provider. This is due to the fact that each insurance carrier has its own method for calculating risk and determining what you must pay for coverage. This implies that no two insurance companies will give you the same policy for the same cost, which is frequently a significant amount of money. So, if you don’t shop around, you could end up paying too much.
A Lapse in an Auto Insurance Policy Can Affect Your Rates
A gap in your car insurance, or a period of time when you lack coverage, can make car insurance companies uneasy. Driving without insurance is not only illegal but also seen as high-risk to insurance providers. In turn, you can end up with much higher premiums if you let your car insurance policy lapse and do not purchase new coverage. You are allowed to switch car insurance companies between your policies, but you must make sure your new coverage is set in the place of your old one before it expires.
Setting Your Deductibles Higher Leads to Lower Insurance Rates
Your insurance deductible is the amount you pay when you file a claim before your insurance company provides a payout. It has an inverse effect on your car insurance rates. The higher the deductible you agree to pay, then the lower your insurance rates will be. Always be sure you can afford a new deductible amount before setting it higher to save on your premiums.
Always Ask Car Insurance Companies About Discounts
Another essential part of shopping for car insurance is to always ask about car insurance discounts. Things like safe driving, vehicle safety features, and even paying your insurance premiums in full can get you a break.
Gauging Your Coverage Also Gauges What You Pay
While you may not have the option to drop your liability coverage if your premium exceeds your budget, you can do it with your add-on coverages like comprehensive and collision insurance. If you feel like you’re paying too much, you can always adjust your auto coverage. Just make sure it’s reasonable; you don’t want to cut corners.
A Car Insurance Policy Can’t Lapse Before it Expires
If you were to get into an accident or lose your license, then your car insurance policy doesn’t cancel then and there. It has to last up until its expiration date, when it must be renewed. An insurer can drop you at any time if you miss paying your premiums or commit insurance fraud.
No-Fault Car Insurance is For Medical Payments
There is a misconception that no-fault car insurance, an auto policy add-on, relieves a driver of fault if they cause an accident. No-fault insurance has its name because it covers your medical payments regardless of who is at fault in the accident. This is important to know before you decide to purchase.
Vehicle Color Doesn’t Affect Insurance Premiums
There is a myth in the car insurance world that red cars cost more to insure because they are involved in more crimes. Not only is car color not a determining factor in car insurance premiums, but statistics show that grey and silver cars are used more in crime. The color of your car shouldn’t worry you when it comes to insurance.
Some Safety Features Don’t Affect Your Insurance Premiums
While car insurance companies do provide breaks in premiums for certain safety features a car has, they should never be the go-to discount. Even the safest car won’t be able to get low rates for high-risk drivers with a history of accidents. Dashcams are an example of one feature that car insurance providers won’t give discounts for.
You Don’t Pay More For Insurance as You Get Older
To set the record straight about age and car insurance -younger and new drivers ages 16 to 25 have the most expensive premiums because they don’t have much of a driving record for the insurer to reference. If you are a safe driver, your premiums will decrease from 25 years onwards. However, they are known to pick up again when you turn 64.
Yes, Insurers Look at Your Credit Score
Your credit score is a concrete indicator of how financially responsible you are when it comes to making payments. You’ll need to do this with your insurance premiums. So, insurers do look at your credit score and assign you a premium based on the risk they gather from it.
Rental Car Insurance Doesn’t Insure Rental Cars
Rental car insurance helps with keeping your premium low after an accident in a rental car. However, the insurance doesn’t cover damage to the car itself -only the rental fee while it is repaired. This is another big misconception in the car insurance world.
Insurance Follows The Vehicle Not The Driver
Let’s say that you let someone else drive your car. If they were to get into an accident, then their insurance won’t cover it. You would have to add them as a rider to your own auto policy because insurance follows the car it’s assigned to. Because of this, your insurer may not provide a payout if someone else gets into an accident in your car.
Car insurance is required by law - and paying too much for it should be a crime! Insurance Navy helps all drivers find the best affordable auto insurance plans. Contact us today for your free quote at 888-949-6289 or online. Prefer to speak with someone in person? Stop by one of our many conveniently-located storefronts.