Car insurance is a basic necessity for anyone who owns a car. In many states, third-party liability insurance at the very least is required by law. However, the insurance coverage you have for your car should go far beyond simply providing for the expenses of someone you hit. On the contrary, it should cover your expenses so that you can fix or replace your vehicle.
There are a number of things you need to know about car insurance in order to make the best decision. These include what type of coverage you should get, what you need to do when you hit a car, and what you can expect to pay. The good news is that the information itself is not complicated.
Here are the basic things you need to know about car insurance.
Factors Which Affect Your Premiums
You probably know that you will get a personalized premium from your insurance provider. You can have precisely the same car as someone else and may get a very different price. This is based on factors that make you more or less of a risk on the roads.
But what factors are considered when determining your premium? These are the most common ones:
- The make and model of your car: this is calculated based on more than just the price of your car. Rather, the equation includes the presence or absence of safety features, the cost of replacing parts, the expertise required to fix your car, and more.
- How you drive: people who drive during peak times will pay more than those who drive when the roads are quiet. Also, the more you drive the more your car is at risk, thereby raising your premiums.
- Your driving record: if you have been involved in collisions in the past, you may receive higher premiums.
- Demographics: your age, gender, and marital status all impact your risk assessment. Young, single men are the most likely to have an accident.
- Where you live: if your area has a high crime rate and you have to park on the street, you will pay more.
- Your credit score: this is a controversial one. Many insurance companies consider credit score as an indicator of risk, citing data that drivers with good credit have fewer accidents.
The Types Of Coverage You Need
As an absolute minimum, you need insurance that will cover any damage you do to someone else’s property or person. This liability cover ensures that you can pay for the person’s medical bills and the repair or replacement of their car if the collision is your fault.
But you should have more than liability insurance. In addition, you should get the following types of cover:
- Collision: This covers any damage to your car in a collision, whether with another car or an object such as a tree. It will pay out when you are at fault for the accident, while the other driver’s insurance will pay if they are at fault.
- Comprehensive: This includes cover for theft, as well as for damage caused by named perils, including fires, floods, vandalism, hail, etc. Colliding with a deer is also covered by comprehensive, not collision, cover.
Rewards And Discounts Are Available
The price of car insurance in 2022 should not be fixed. Rather, you should be able to get discounts and rewards. Many companies offer discounts for good driving. They use tracking technology to assess how well you are driving according to metrics that they will share with you. The better you drive, the less you will pay for your insurance.
There are other factors that can get you discounts, including low-mileage discounts, safe driver discounts, and discounts for insuring multiple cars with the provider.
Other Drivers Are Covered
Many people think that their car will not be covered if it is in a collision when someone else is driving it. This assumption may have arisen from the fact that rental car companies require you to specify any additional drivers. However, insurance covers the car, not the person.
As such, no matter who is driving your car, your insurer will pay (as long as they are legally allowed to drive, at least).
Deductibles Could Lower Your Premiums
You can lower the price of your premiums by raising the deductibles, which you’ll have to pay before the insurance kicks in. Raising your deductible from $200 to $500 could reduce your cost by up to 30%. Raising it to $1,000 could reduce your cost by 40% or more. However, you are then risking a fair amount of money in case of an accident.
The above are the basics you need to know about car insurance. It is crucial that you are covered as soon as possible, as driving without insurance can leave you in tremendous financial trouble.