In most states across the country, buying car insurance is a mandatory requirement for driving. But buying car insurance for the first time can be tricky and stressful because there is a lot of details you will need to grasp in order to make the right decision. These details are simplified here in order to help you buy the car insurance coverage that is right for you.
Types of Coverage
Each state determines and regulates the types of car insurance residents must buy to be eligible to drive. However, generally, the following types of insurance coverage are the most frequently needed:
- Collision insurance
- Comprehensive coverage
- Uninsured/Underinsured motorist insurance
- Personal injury protection
1) Liability Insurance
In many states, a mandatory minimum insurance coverage required for driving is liability insurance. There are two types of liability coverage, namely:
(i) Bodily injury liability – This coverage protection from claims made against you as a result of injuries suffered by one or multiple people in accidents in which you are at fault. Usually, there are separate types of bodily injury liability, one for if a single person is injured and the other for if many people are injured.
(ii) Property damage liability – This coverage makes provision for damage your car might cause on other people’s property. Liability insurance does not provide coverage for damages caused to your own car.
In many states, these insurance coverages are represented by three numbers. For instance, in California, these numbers are frequently represented as 15/30/5. This means that the coverage required by law for the state of california is $15,000 for bodily injury of one person, $30,000 for bodily injury of more than one person and a $5,000 insurance cover for property damage.
2) Collision and Comprehensive Insurance Coverges – This insurance provides coverage for damages caused to your car in the event of collision with objects or other vehicles. Comprehensive Insurance provides protection for your vehicle against non-collision types of damages such as theft, vandalism, weather conditions, natural disasters and others.
3) Uninsured/Underinsured Motorist Insurance – This insurance cover is required in a few states and it is designed to provide protection for you in the event you sustain injury in an accident with a vehicle whose driver does not have any insurance coverage or one whose coverage is not high enough to cover the damages you sustain. States that demand this insurance coverage do so to protect motorists with the understanding that despite the state laws requiring minimal liability coverage, there might be some drivers who may not meet these requirements.
4) Personal Injury Protection (PIP) – This is an insurance coverage that covers the cost of your medical expenses resulting from an accident in which you are involved irrespective of whether you are at fault or the other driver is. With this insurance coverage, you can pay for your medical bills without having to wait for the conclusion of a lengthy investigation of the accident meant to determine who was at fault. In addition to medical bills, PIP insurance also pay for lost wages that you may incur as a result of an accident.
Factors That Determine the Cost of Car Insurance
People pay different amounts for car insurance. This is no haphazard occurrence. Insurance companies take into a number of factors that help them gauge risk to determine how much you pay for your car insurance. Some of these factors include the following:
Your deductibles – If you choose a higher deductible, you will make lower monthly payment. Conversely, if you choose a lower deductible, you will have to make higher monthly insurance payment.
How many miles per year you drive – If you drive long distances and cover a lot of miles, you are likely to pay more on insurance than someone who drives less.
Where you live or your neighborhood – If you live in a neighborhood that is susceptible to vandalism, theft and collision, you will most likely pay more in car insurance than someone who lives in a neighborhood where such incidents are less or non-existent.
Your age and gender – Young people under the age of 25 are more likely to crash their vehicles. Of this group, males statiscally tend to have more accidents than females. For older people, males have better rates than women. These differences are taken into by insurance companies when determining premium.
The safety rating of the car you drive – Based on vehicle safety ratings that insurance companies have developed, they offer discount to folks who drive cars that are rated as safer vehicles.
Your credit history – Generally, having a good credit history with high credit score means that you will lower insurance premium.
Your driving history – If you have a history of frequent car crashes, you will pay more in insurance premium than if you had been crash-free for several years.
Ways to Lower Car Insurance Costs
There are some definite steps you can take to lower your car insurance cost. Most insurance companies will be willing to give you discount or lower the cost of premium for you if you meet certain expectations and thus, reduce the risk that comes with insuring your vehicle. Below are a few ways you can do this
Choose the Right Car – If you choose a large car, you will enjoy the benefit of a car with top-notch safety fittings which will give you good safety ratings. With good safety ratings, you will have lower insurance premium than if you had got a smaller car that lacks such safety fittings. However, most large cars have large engines relative to body size and usually have higher premium than a small car with a small engine. Moreover, large cars are usually more expensive to repair when they are involved in an accident. Your best bet therefore, is to go with an older car with a small engine. A car that has gone a few miles and do not cost the earth to purchase.
Upgrade your car security – Whatever you can do to reduce the chances of your vehicle being stolen, vandalized or damaged will significantly increases the security of the vehicle and thus, lower your insurance premium. You should consider fitting your car with an alarm, engine immobilizer or a tracker to add security to it.
Reduce the distance you cover with your car – You can do this by joining a car or van pool or taking public transportation to work and back especially if you are in a line of work, such as being a delivery or a journalist that require you being on the road constantly. By reducing your total annual driving mileage you may be abk to lower your insurance premium.
Improve your driving record – If you have a history of crash-driving, endeavor to clean this up by maintaining a clean driving record. If you maintain a clean driving record long enough, the effect of past crashes will wane and your premium will be lowered.
Maintain a good credit history – By maintaining a good credit history and score, you give yourself a good basis for asking for lower premium on your car insurance.
Take advantage of opportunities for discount – There are instances when you might qualify for a discount that will lower your insurance premium cost. For instance, you could qualify for a discount if you are getting coverage for a newer vehicle or are being added to a policy that has multiple vehicles. If you are a young person still living with your parents, you should consider being added to their insurance policy as this will give you an appreciable discount on your premium. And when the time come when you want to move to your own policy, set it up before removing yourself from your parent’s policy. This way, you will enjoy the discount that comes with maintaining continuous coverage. Furthermore, if you are a student or a teenager, you can increase your chances of getting a discount if you complete Driver’s Education and maintain good grades in school.
Consider increasing your deductible for a lower monthly premium – You might want to consider going with a higher deductible in order to lower the amount you will pay as monthly premium. However, you should be careful with this strategy so that you don’t raise your deductible so high you struggle to come up with the money you need to make claim if and when the need arises.
Tips on What to Do When Buying Car Insurance for the First Time
In seeking to buy car insurance, you should understand that there is no one size fit all policy. Different people buy different insurance policy depending on their unique needs and situations. However, there are a few tips that could help you as you make a decision on car insurance policy to ensure that you get the right insurance coverage and a good deal. These tips include the following:
Determine What Coverage is Necessary – It is vital that you get enough insurance coverage but it is also important that you avoid getting more than you need. At the minimum, you will need the state required liability insurance requirement for driving. However, for many state, the required minimum liability coverage is not enough to pay for serious injuries or replace newer cars. Therefore, you may have to buy additional liability insurance to guarantee that you are fully covered in the event you get involved in an accident in which you are at fault. This is important especially if you have a home or savings which might become a target of lawsuit in the event of a lawsuit. In addition, you should get comprehensive and collision insurance coverage if you owe money on your car or if you could not easily replace it. However, if your vehicle is old, the minimum liability insurance requirement may be enough for you.
Research Car Insurance Companies – If you elect to contact an insurance company on your own, it is vital that you do some research on the company you are looking to sign up with. This research will give you insight that will help you determine if you should go with an insurance company you are considering – or one that your agent has suggested – or if you should look for another one. Some of the ways you can research a company include doing the following:
-Check the company’s rating on the Better Business Bureau (BBB)
-Check with your state’s Department of Insurance for customer complaint ratios
-Talk to your family members or friends who have car coverage from the company. Find out what their experience with the company has been.
-Check the company’s social media accounts to see what comments customers leave there.
-Call the company’s office and gauge their responses and reactions to your questions. Is the response warm? Did they answer your questions in detail or their answers were cursory? What do you make of the quality of customer service?
-If you can, find out about the financial standing of the company. You can use the services of J D Power and A M Best for this purpose.
Choose a Deductible You Can Easily Pay – Your Insurance deductible is the amount of money you pledge to pay before the insurance company will pay your claim. The higher your deductible, the lower your monthly premium will be. A lower deductible means that you will pay more on premium. Paying higher deductible in order to lower your premium may seem like a great idea but it will definitely not look that way if you get involved in an accident and the insurance company refuses to pay your claim because you are not able to the high deductible. On the other hand, if you lower your deductible excessively, you have a tough time regularly paying your monthly. Therefore, the key is to strike a balance between what you can conveniently pay as deductible in the event of an accident and what you can conveniently pay as monthly premium.
Utilize an Independent Insurance Agency – While it is okay if you decide to go out on your own to buy car insurance, there is a great advantage in utilizing an independent insurance agency that can shop multiple insurance providers to find the best combination of coverage to meet your need at a cost that you can afford. More so, using an independent insurance agency will help you better navigate your way if you have a tricky driving record.
Inform Insurance Agency of Security Features – If your car has top-notch security features such as anti-lock brakes, on-board GPS tracking system and etched VIN number, you should mention this fact to the insurance agency if they do not ask. The presence of these features will go a long way in lowering your insurance rates because they make more difficult for your car to be stolen and easier for it to be recovered if it gets stolen.
Ask to Bundle – Bundling your insurance policies means that you buy your car insurance from the same insurance provider that insures your home, boat and other possessions. By so doing, you get rewarded for your loyal patronage with discounts on your auto policy. If your insurance provider has provision for bundling, look to take advantage of it.