Top Tips for Buying Car Insurance

Are you shopping for insurance for your vehicle? Here are some things that you need to know:

How Insurance Rate is Determined

Two factors determine how much you will pay for car insurance: rating and underwriting. Insurance companies usually underwrite to evaluate the risk associated with applicants then group them with other similar risks to determine if they will accept their applications.

Based on underwriting results, the company assigns a price based on what it believes it will cost to assume financial responsibility for your potential claim. Every insurance company has a different rating system, which is usually affected by claim frequency.

Specific Factors that Affect Your Rating

Your driving record – if you have previous accidents or violations, you are considered high risk.

Prior insurance coverage – have your previous insurance policies been cancelled because of failing to pay premiums? This is also taken into account.

Your geographic location – urban locations have more claims than rural ones

Your age and gender – male drivers have more accidents and some ages have more claims

Vehicle use – higher mileage means more risk

Your marital status – married people usually have fewer claims

Vehicle make and model – sports and luxury cars have a higher number of claims

Ask Your Agent about Discounts

If the insurer sees you as a better risk, you might be given a discount. You should look out for a number of discounts, including anti-theft devices, good student, good driver, and driver education courses. However, you should know that not all states offer discounts.

Check Optional Coverage

The most commonly recognized coverages, aside from the basic liability coverage, include comprehensive and collision coverage. The latter pays for physical car damage when your car collides with an object such as another car or a tree. Although this coverage is reasonably priced, it is also optional.

Comprehensive coverage, on the other hand, pays for car damage caused by all other factors, including fire, floods, vandalism, and theft. It is less expensive than collision coverage and optional.

No Fault vs. Tort System

Each state should implement a no-fault or tort system, which determines the type of insurance that will be available to car owners. The tort system has three basic coverages, which include uninsured motorist coverage, property damage liability, and bodily injury liability insurance. If your state has the no-fault system, the insurer will pay you directly for losses resulting from accident injuries regardless of who is at fault.

Shop Around Before You Buy Insurance

When buying car insurance, premium quotations are helpful for comparing products from different companies. Therefore, when asking for quotations, you need to give the same information to all companies. An agent usually asks for the following information: the coverage limit you want, your driver’s license number, and the description of your car.

Where to Shop

When looking for cheap car insurance online, you should visit several websites and do a comparison. Moreover, you can check the yellow pages for agents and companies in your area of residence. When talking to neighbors and friends, you should ask for the specific claim service they got from the companies that they recommend.

For Your Protection

Once you pick the insurance coverage and company that you need, you can take several steps to ensure that you get your money’s worth. Before you sign any insurance coverage application, you should verify that your prospective insurer is licensed to operate in your state by calling your state insurance department. It is illegal for unlicensed companies to sell insurance; this means that if you buy from them, you have no way of knowing whether the coverage will be honored.