What should I look for when buying Auto Insurance?

What should I look for when buying Auto Insurance?

What should I look for when buying Auto Insurance? 



Auto insurance is a vital type of insurance for drivers who own or lease a car. Purchasing auto insurance with the right coverage is a hard decision especially for first-time seekers. In buying auto insurance for your vehicle, you must understand the terms in your agreement, such as the coverages you choose and the limits of each coverage. In addition, buying auto insurance, you must know the exclusions of your policy and the amount of your deductible.

Coverages of Auto Insurance

Auto insurance contains different coverages that protect the policyholder in an accident. Liability insurance coverage is an essential coverage of insurance that a driver must carry in most states as a requirement. However, not all kinds of an accident can cover by liability coverage. You might want to consider additional coverage to cover your needs.

Liability Coverage

Auto liability coverage has two different forms: Bodily Injury Liability and Property Damage Liability. Drivers must carry both types of coverage in most states. Remember that liability coverage only covers damages to the third party, which is the policyholder is found legally liable. 

Bodily Injury Liability – if the policyholder is at fault in an accident that injures another individual. It covers the medical expenses for the third-party. 

Property Damage Liability – if the policyholder is responsible for an accident that caused damages to another individual’s property, it will cover the repairs or replace the losses. 

  • Bodily injury per person: offers a minimum limit of $15,000
  • Bodily injury per accident: offers a minimum limit of $30,000 
  • Property damage: offers a minimum limit of $5,000

Medical Payments/ Personal Injury Protection

Medical payments cover the medical expenses of your injured passenger or family members in an accident using the policyholders’ vehicle. This coverage includes hospital visits, surgery, and more. Personal injury protection (PIP) does the same; however, it is only available in some states. PIP may cover your medical expenses as well as a loss of income and child care expenses. 

Comprehensive Coverage 

Comprehensive coverage covers the damages of your vehicle in certain peril, such as’ fire, theft, vandalism, and other covered peril. This form of coverage will cover the repair and replace the damages of your car up to its actual cash value. Comprehensive coverage has a deductible, an amount that you need to cover out of pocket before the insurance provider reimburses you for a covered claim.

Collision Coverage

Collision coverage covers vehicles that are damaged in a car accident with another car or object such as a fence. This coverage includes the repair and replaces the damages up to its actual cash value, minus your deductible. Comprehensive and Collision coverage is an optional coverage, however, if you are financing your car. Your lender may require you to purchase these types of coverage. 

Uninsured and Underinsured Motorist Coverage 

Uninsured motorist coverage covers you in an accident that an at-fault driver does not carry liability insurance to cover your damages. On the other hand, Underinsured motorist coverage covers you in an accident with a driver that carries an insufficient amount of insurance. It means, the at-fault driver cannot cover the entire damages that he/she causes you. Uninsured and Underinsured Motorist Coverage is an optional coverage but mandatory in some states.

Who is covered by your Auto Insurance? 

Your auto insurance basically will provide coverage for you, including your family members, whether you are driving your vehicle or someone else’s vehicle with the owner’s permission. Personal auto insurance also covers an individual driving your car with your consent.

Why does Auto Insurance Important? 

To further understand the importance of auto insurance, is you have to know how it works. Auto insurance does not protect your car from damages; it protects you against financial loss as well as in legal claims. Every state has different laws in carrying auto insurance, but most states require drivers to carry auto insurance to cover the damages to others that you are legally liable. 

What could happen if you get in an accident without Auto insurance? 

In the event, you do not have auto insurance, and you cause an accident, you need to cover all the damages out of pocket. Additionally, you may face additional fines for the accident and also for not carrying auto insurance. Most states law, if you are at fault in an accident, you are liable for the damages and medical expenses of the third-party, and if you cannot cover the costs, you could end up getting sued and go to jail.

What is not covered under your Personal Auto Insurance? 

Personal auto insurance provides protection for the policyholder against financial loss in the event of an accident. This form of insurance covers personal use vehicles, which means cars used in conducting business are typically excluded. However, if you use your vehicle in a business operation, your Commercial Auto Insurance will help you cover the damages in a particular accident. 

How to determine your insurance cost? 

An auto insurance premium is usually based on several factors, such as your age, the location where you live, the type of vehicle you drive, accident history, and more. Drivers at a younger generation usually face high premiums due to a greater risk of an accident they carry. However, you can lessen your premium by paying a higher deductible, which the amount you must pay before the policy claim kicks in.

Factors that can affect your premium

Your Age 

The age of the driver is one factor that may affect your insurance premium. Younger the driver, the higher the premium, why? Because drivers at a younger age are the riskiest category of drivers to insure. The Insurance Institute for Highway Safety (IIHS) simplify those drivers at the age of 30 to 69 are much less risky to crash. On an auto insurance basis, keeping a clean record, auto insurance will give you a fair rate until becoming a senior.

Your Location

Insurance carriers will usually ask for your ZIP code to determine where you live, that is the start of most base rates. In an instance, you live in a prone accident, highly populated, urban area, insurance claims are more frequent. Using your ZIP code insurance companies can determine the number of cases or rates of stolen vehicles in your area, incidents of vandalism, and frequent weather resulting in a claim. Not all states will base your premium rates on where you are located. For example, the State law of California requires auto insurance providers to determine rates based on the drivers’ driving record, years of experience, and annual miles are driven.

Your Driving Record

Maintaining a good driving record can lower your premium rates than a driver that has multiple violations or accident records. Drivers who have histories of violation and accident, in an instance, speeding, DUI, and more are more risky for auto insurance providers, resulting in much higher premium rates. Having a clean driving record qualifies a driver for better rates and good driver discounts. 

Your Record of Claims

Auto insurance providers calculate your premium rates based on your claims history, including the claims with the previous insurers. Having a record of liability claim will likely result to increase in your premium. However, collisions and comprehensive claims may not affect your premium. Several claims also matter if you had three claims in 2 years. Auto insurance providers will see you as risky to insure or either give you a higher rate or might not renew your policy at the end of the term.

The Type of your Vehicle

A type of vehicle that you are ensuring may affect your premium rates. In an instance, the policyholders’ record says that the drivers of the model vehicle have more records of claims. Typically, the rates will be much higher. Insurance providers will also base on the; purchase price, theft rate, cost of repairs, safety tests, and accident rate. 

The Use of your Vehicle 

Auto insurance providers will usually ask the use of your car if the vehicle is used to commute to school or workplaces. Using your vehicle more often is riskier than a car that is used only for errands. Personal use vehicles cost lesser rates than business use vehicles, since using your vehicle for business purposes it contains a higher risk in an accident. On the other hand, there is a commercial auto to cover business use vehicles. 

The Annual Mileage

The lesser you drive, the less risk of an accident. Your auto insurance providers will determine the length of your commute. If annual mile driven will go lower, you should let your insurance provider know to get a lower premium. 

Your Auto Insurance Coverages

The types of coverage you choose with a higher limit can cost your premium much higher. However, having a higher limit than the minimum is better to cover all the damages in an accident. Remember that insurance providers will cover the costs in an accident up to your policy limits. 

You may not have control of your age and gender. However, having a good driving record, and choosing the right coverage is an essential factor to lower down your premium rates.

Talk to an independent insurance agent to help you find the right coverage. Get a Free Quote to compare rates!