Car Insurance – All You Need to Know

Car Insurance – All You Need to Know
Car Insurance – All You Need to Know
December 12, 2016

The common factors that influence how much you pay for your car insurance are – your age and marital status, the place you live and the car you drive. We shall show you how to select a car that will cost you less to insure and how to pay less insurance premium.

Your insurance policy may cover some or all injuries, damages, and lost

Every insurance policy has one or more components. The most common components are:

Read also: Car Insurance Guide - All You Need to Know

  1. Bodily injury liability: If your car injures or kills one or more people, this component will cover your compensation and legal cost.
  2. Property damage liability: It covers the claims when your car damages the property of other people. It may not be required in every state.
  3. Medical payments: You get paid not only for your injuries but also for the occupants of your car.
  4. Uninsured motorist protection: What if you are injured by an uninsured or hit-and-run driver? This component will cover the injuries of you and the occupants of your car.
  5. Collision coverage: This component will pay up to the book value of your car but usually carries a deductible.
  6. Comprehensive (physical damage): This covers when your car is damaged or lost by non-accidental causes such as fire, theft, flood, wind, vandalism, etc.

You pay higher premium for expensive cars

It is a common sense thing that your insurance company must pay you more when your car is expensive. So, they will charge a higher premium for expensive cars. They will charge you higher premium if the parts and labor costs in repair are expensive. Besides, they may apply surcharges if the model of your has a bad record of frequent accident or stolen record. Be prepared to pay dearly if you are going to insure an expensive car such as a sporty car.

Which cars have the lowest injury claims? Usually, large vehicles such as pickup trucks and sport-utility vehicles.

Which cars have the highest injury claims? Usually, 2-door and 4 door cars.

Insurance premium varies from company to company. So, it will be wise to talk to your top selected/short-listed insurance companies if you will buy your car soon.

You will pay more if you are a young and/or unmarried man

Males under the age of 25 have bad records of involving in more accidents than females of the same age. So, males of this age pay higher than female of the same age.

Unmarried males have a record of involving more in car accidents. So, they pay more than married males.

No tickets, no accidents – you pay lower rate

When you have no record of bad driving and accidents, this will surely help you to pay less premium than drivers with bad records. If you are involved in accident and have bad driving records, you gender, age and even marital status will not help you to get a lower premium rate. In such cases, you must pay high premium rates.

Want lower rates? Do not live in highly populated and high traffic areas

This is a common sense thing that the more traffic in an area, there will be more car accidents and injuries. People in rural areas usually pay at lower rates as expected. Living in a low traffic area is also safer choice for you and your car. Car theft is more frequent in high traffic areas.

Are you rich? Buy more insurance coverage

The more coverage you get, the more you pay for insurance.

When you have a lot of assets and income, you will lose more in an accident. To protect your assets and income, you should buy maximum coverage to safeguard your assets. You may want to buy an umbrella policy. In case of a major lawsuit, it will protect you and your family. Otherwise, the basic coverage is usually enough for most drivers.

Talk to several companies to get the best rates and options

There is no one single offer that is suitable for every driver. The more prospects you talk to, the higher the chance of getting the most suitable rate and option for your case. Alternatively, you can do your first research online because there are many websites that have enlisted car insurance premium rates.

Beware paying monthly

If you pay in full and you can save even more than 10% than your monthly installment plan. Paying monthly is usually paying more. Even if you pay monthly, try to use a 0% credit card.

Car insurance renewals can be just losing your money

There are many cases, insurance buyers have paid more for insurance renewal. Interestingly, you  would usually pay less if they buy a new insurance policy. Exploiting more money from car insurance renewal is a hidden trick used by insurance companies and agents.

Read your policy papers carefully

Do not believe whatever the insurance company or their agent tells you. They may lie or exaggerate benefits. You must read the full policy document a few times. You may not understand everything in it. Question your insurance agent. If you are still in doubt, contact the state insurance department.

You can switch mid-year

Many car insurance buyers have a misconception that they must wait until renewal if they want to switch their policy. Of course you can cancel your current policy, get a refund and switch to a new one.

Never lie to the insurer

Why? Two problems – (a) the insurers can prove you are a fraud and invalidate your claim and (b) a lawsuit can be filed against you. You do not want this, right?

How you can reduce your premium

You may find one or more of the following tips helpful to reduce your car insurance premium:

  • As we already said, contact several companies to get the best rates.
  • If your health insurance is promising very good coverage, drop the medical payment portion of your car insurance and you will be able to save money.
  • Do not buy a policy only because it is cheap. Later, you may discover that it does not provide enough cover when you make a claim.
  • If you put all family members in your policy, you have to pay more. Include only the regular drivers.
  • You premium will go up if you file even for small claims. So, avoid doing this.
  • Oftentimes, discount offers are available. Make sure you are aware of all the discounts and you get all of them. Ask your prospect about all available discounts.
  • You can get 90% discount on your premium for your long no-claim bonus.
  • Oftentimes, your credit rating influences your premium rates. Make sure your credit rating is very good.
  • The more you increase you deductible for collision and comprehensive, the less premium you pay for those sections.
  • Sometimes installing safety devices can ensure about 5% discount on your insurance premium.
  • Your claims cannot be more than the book value of your car. So, there is no use of getting collision coverage on an old car.
  • Some insurers charge you less if your car is kept in a well-maintained garage overnight.
  • If you are not a good driver, go to an advanced driving school to hone your driving skills. This will help you from not only most accidents but also to pay lower premiums.
  • If you use public transport to go to office, you can drive less and save mileage. There is a high chance that you will pay less if you drive 7,500 miles per year.
  • Ask your family, friends, and relatives for recommendations and opinion. Besides, check newspaper and yellow page directories to find offers and talk to them.
  • If you want to buy add-ons from insurers, make sure you verify price from the car market. Oftentimes, insurers may try to over-charge you.
  • Stay loyal. Insurance companies can offer lower rates to regular and long time clients.
  • Move to a low crime area if possible. This is also good for the safety of you and your properties.

Learn more

We have answered some questions here: Click here to read the car insurance guide.

Article highlights

  • Before you buy, determine which insurance coverage you need.
  • Young and unmarried males usually pay higher premiums than others.
  • Expect to pay less if you have no tickets and no record of accident.
  • Rich people should buy maximum coverage to protect their assets.
  • Shop around to get the best and low premium offer.
  • If possible, pay in full to save money.
  • Read and understand everything written in the policy papers.
  • You should never lie to the insurer.
  • Cheap insurance policies may not provide enough coverage.
  • Do not get collision coverage for your old car.
  • If you stick to the same insurer for long time, they may charge less.

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