Auto insurance isn’t as exciting as buying a new car. But it is even more important than the car. After all, insurance provides a safety net and is a must in almost all US states. If you’ve just purchased your first automobile, the next logical step is to get insurance coverage for it.
A quick search on the internet must have been overwhelming. Several insurance companies are offering affordable auto insurance. The coverage plans sound similar but are different. The add-ons complicate matters further. What should you do? Which vehicle insurance would be the best for your car and your budget? Should you consult an insurance agent?
Worry not. We’ll help you look for answers to these questions and more. Here’s everything you need to know about car insurance.
What is Car Insurance?
Insurance is a contract that the insurer (insurance company) and the policyholder sign. The insurer agrees to pay compensation for damage/ repairs/ loss/ etc., of the car/ automobile as per the terms of the policy.
Types of Auto Insurance
Liability Coverage- Your insurance is used to pay for the medical/ bodily injuries of the victim of the accident. This is when you are the guilty party.
Property Damage Coverage- This insurance covers damages to the vehicle and theft/ loss of the insured car.
Medical Insurance (PIP) Coverage- This policy provides monetary support and pays your medical bills plus other expenses if you’ve been in an accident.
Collision Coverage- This insurance covers damages caused due to traffic collisions with other vehicles, objects on the road, potholes, etc.
Comprehensive Coverage- This policy covers damages due to non-accident events,natural disasters, theft, etc. It has a deductible, where you pay the initial (fixed) amount from your pocket.
Full Coverage- This policy combines liability, collision, and comprehensive coverage. It has a high premium amount to provide full protection for your car.
Rental Car Insurance- This insurance covers rental cars and is further classified into liability (bodily injury, property damage, collision, and comprehensive).
Factors Considered by Insurance Companies
You can get The Cheapest Car Insurance in California if you know what goes into deciding the premium amount for each policyholder. Insurance companies apply an algorithm to determine your risk level and adjust the premium accordingly. They also provide discounts if you meet the criteria.
- Driver’s Profile
Your age, occupation, marital status, gender, etc., can increase or decrease the premium amount.
- Driving History
A clean driving record with no speeding tickets is certainly an advantage. You’ll be eligible for more than one discount.
- Car’s Make, Model, & Age
Expensive/ luxury cars have a higher premium amount, and so do new cars. The basic coverage is enough for older cars.
- Credit Score
A poor credit score will increase the premium amount and vice versa.
Tips for Low-Cost Auto Insurance
We know there’s much to consider when looking for car insurance. These pointers will help have more control over the process.
- Consider the insurance premium and maintenance costs before buying a car.
- Even the choice of car makes a difference to the insurance amount.
- Don’t let the policy lapse. Renewal is easier than taking a fresh policy.
- Look for alternatives to find cheaper premium amounts.
- Shop around and talk to get in touch with more than one insurance agent.
- A higher deductible will reduce the premium.
- A good driving record and a lack of speeding tickets can lower the premium.
- Opt for the state’s minimum liability amount if you’re on a budget.
- You can save on commission if you buy insurance online.
- Try to get as many discounts as applicable.
- Coverage type affects the final premium payment.
- Older cars don’t need full coverage.
- Choose no-fault insurance if it is applicable in your state.
- Being loyal to your insurer will not always be beneficial.
- File a claim only if it is absolutely necessary.
- Don’t opt for the cheapest premium without understanding the T&C.
- Opting for a reputed insurance company has its advantages.
- Don’t ignore low-limit, underinsured motorist, and uninsured coverage.
- Don’t hand over your car to anyone for driving.
- Ask for bundle insurance if you have a tight budget.
Take your time before tying up with an insurance company and its offer. Compare the quotes, but first, understand the components and factors that affect the premium amount. We recommend shopping for insurance before you buy the car. This will allow you to adjust the budget for both payments.