Things to Know About Auto Insurance

Auto insurance premiums are determined by what type of risk factors you have and what level of coverage you choose.  Some of your risk factors are within your control, and some are not.  Having an understanding of the risk factors that determine your auto insurance quote will help you get the best coverage at the lowest price.

An auto insurance policy is made up of different types of coverage.  Liability coverage, comprehensive coverage, and collision coverage are the three main types of cover, but there are additional types of coverage available. 

• Liability coverage covers the damages you are responsible for because of an accident.  Most states require all drivers to have a minimum level of automobile liability coverage by law.
• Collision coverage covers the physical damage to your vehicle if an accident occurs.
• Comprehensive coverage covers physical damage to your vehicle that is not accident related.

Both collision and comprehensive coverage are optional but are strongly recommended.  You should never settle for the minimum auto insurance coverage required by law.  The more auto insurance coverage you buy, the cheaper it is.  That means you can get significantly more insurance coverage with just a small increase in your premium payment.

A number of different risk factors determine how much premium you will need to pay for auto insurance.  Gender, age, occupation, driving record, type of vehicle, and where you live are just some of the factors considered when calculating auto insurance quotes.  Based on past accident and theft statistics, insurance companies use these factors to determine the probability that you will file a claim.  For example, if you have a perfect driving record with no moving violations, insurance companies feel like you are less likely to have an accident.  Therefore, your auto insurance quote will be lower than someone who has one or more speeding tickets.  Of course, it costs more to insure types of vehicles that are prone to accidents and theft such as highly desirable new models or sports cars.

There are a number of strategies that can help you get a lower auto insurance quote.  First and most importantly, you can shop around.  While most companies use similar methods to determine premiums, there is a lot of competition for your business in the industry.  Premiums for the same coverage can vary by hundreds of dollars from one company to another.  You can also ask for discounts.  Many insurance companies will reduce your auto insurance premium if you purchase another form of insurance such as homeowners insurance or life insurance from them at the same time.  Likewise, if you have anti-theft devices or additional safety features on your vehicle you may also qualify for a discount, so it is very important to ask.  If you need to lower you premium further, consider getting a higher deductible.  Paying your premium in fewer installments can also save you money, as typically installment plans charge fees.

While switching policies can help you save, it’s important to never leave a gap in your auto insurance when you do in terms of the time the coverage is in-force.  Before you cancel an auto insurance policy, make sure you have another one activated and in-force.  That way you will always be covered, and you can avoid any penalties your state might impose for not carrying proper insurance.