Confusion and unfamiliar phrases plague many car owners. Find the best coverage (and pricing) for your car. Buying automobile insurance, whether online or through an agent, is complex. While the internet makes it easy to compare policies and costs, the insurance industry’s jargon can be confusing. Long-held insurance myths also muddle the decision-making process as many people think red cars cost extra to insure. We have gathered some auto and automobile insurance tips for you.
“Not true. Speeding and accidents raise rates,” says Loretta Worters, Vice President of public relations for the Insurance Information Institute. As a result, “driving a red automobile while speeding or getting into an accident” is not grounds for increased premiums.
Colour is not a factor considered by insurance companies when determining premiums.
Here are seven auto and automobile insurance facts and tips you should know about:
1. How are prices set?
Premiums are calculated differently by each insurer, although the underlying variables are similar. These include the car’s make and model, how you utilize it (do you drive to work?), and your driving record.
Other factors include:
- Gender, age, and marital status: Statistics reveal that young drivers and male drivers are more likely to be in an accident. The drivers who are married are less likely to file a claim.
- Location: Living in a high-crime urban region puts you in greater danger than someone who lives in an area with less traffic and car thefts.
- Your credit score: Insurance companies can use credit scores to calculate premiums in certain jurisdictions. According to the business, drivers with better credit had fewer accidents. In their opinion, this unfairly penalizes low-income automobile owners and should be banned.
2. Collision vs comprehensive insurance
Insuring a car might be confusing. Many folks don’t appear to know what they’re buying.
According to a recent survey, 68% of Americans believe their comprehensive coverage includes collision damage.
Insurance Information Institute states that:
- Comprehensive: It protects against theft and damage caused by incidents other than collisions, such as a deer or falling rocks or trees.
- Collision: Damage to your car as a result of colliding with another vehicle or object (such as a tree or guardrail) while you are at fault. It also covers potholes and rolling your automobile.
Comprehensive and collision coverage are optional auto insurance. Liability insurance is required by law to cover the costs of injuries, death, or damage to another vehicle or property caused by you or another driver while driving.
3. An expensive car doesn’t usually mean a higher premium.
When looking for a new car, it’s critical to know how much insurance will cost for each model you’re considering.
The consumer analyst Penny Gusner says an expensive SUV may have better accident or theft claim rates than a cheaper car, lowering costs.
4. Auto insurance might be cheaper.
Reduce your insurance bill in numerous ways. In some circumstances, coverage is reduced. An example is dropping comprehensive coverage on an old car.
Raising your deductibles, or the amount you pay before insurance kicks in is another way to save money – assuming you can afford it.
Insurance Information Institute says that:
- Raising your deductible from $200 to $500 will save you 15 to 30% on collision and comprehensive coverage.
- A $1,000 deductible can save you up to 40%.
Among the many reductions offered by insurance providers include low mileage, multiple automobiles, safe driving (no moving offenses in three years), and good grades. Bundling auto and homeowner’s insurance with the same insurer may also save you money.
5. Personal auto insurance does not cover business use.
Most policies forbid commercial use of a personal vehicle. Many insurers usually cancel your policy if they find out.
“People need to know that if they do any side hustle like pizza delivery, messenger or ride-share driver, they need to make sure they’re covered,” Gusner said.
Ask your insurer about adding a business driving endorsement to your coverage. When Lyft or Uber drivers have a customer in the vehicle, the ride-share firm covers them. They’re at risk when they’re waiting for the next rider. According to NerdWallet, a business usage endorsement typically costs $10 to $20 per month.
6. If you let someone drive your automobile and they meet an accident, the policy will cover you
Auto insurance follows the automobile, not the driver.
According to Eric Madia, Esurance’s vice president of product design, “you’re essentially lending them your automobile and your insurance.”
Don’t allow someone else to drive your car unless it’s an emergency or you’ve been drinking.
7. If you let your auto insurance lapse, it could cost more when you need it again.
Avoid canceling your auto insurance if you won’t be driving for a long time. The same goes for bills. Any reason for lapsed coverage will result in increased insurance rates down the line.
“Car insurance companies perceive the uninsured to be a bigger risk than those who meticulously maintain their policies,” Esurance writes in a blog post. “An uninsured day can raise rates.”
If you aren’t driving an automobile for a long time, talk to your insurance carrier about your alternatives.
How to Save on Automobile Insurance?
If you want the best insurance deal, you must search around—a different underwriting policy results in a different price. Our above given automobile insurance tips can help you in the process.
Insurer premiums range by hundreds of dollars every year, according to Worters at the Insurance Information Institute. “You want a vehicle insurance company with a good rating, good pricing, and decent service.”
Consumer Reports recommends checking your auto insurance rates every two or three years. “By going beyond just a few insurers,” the editors write. When you get married, divorced, or move to a new house or apartment, you should shop the market.
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