What should I consider when buying auto insurance?

By | October 5, 2021

Auto insurance has become quite an expensive affair in the last decade or couple of years. There are many factors that govern the cost of an auto insurance policy like accidents, deductibles, multiple coverages, age, etc. Auto insurance is an important financial tool, which can provide assistance if damages are caused on your vehicle or by your vehicle. Hence there are many things that you need to consider when buying auto insurance. Some of them are:

Coverage – Auto insurance companies

Insurance coverage plays an important role in helping you decide the type of insurance you are going to purchase. The coverage decides both the pricing and the worthiness of an insurance policy. If your policy doesn’t cover anything beyond your house, and yet you are paying a higher amount of premium then it’s definitely not the right policy for you.

The basic coverage of auto insurance does not include just your physical injuries but includes the damages on the car and to the other person involved in the accident. There are different types of coverage options like Comprehensive, collision, bodily injury liability, property damage liability, Personal injury protection and uninsured motorist coverage.

It is important for you to decide what kind of coverage you require and why? Once you have identified the type of auto insurance coverage required by you, half the battle would be won. You can then find rates offered by various insurance agencies for that particular coverage. Once you have the best price or premium, you can choose the right provider.

Premium cost

The cost of the premium is dependent on many factors and not just the policy coverage. The various factors that affect the premium are:

  • Age or driving experience
  • Vehicle use
  • Claims history
  • Driving history
  • Make and model of your car/vehicle(s)
  • Geographic location
  • Credit history

If there is any discrepancy in any one of the above factors then the premium will automatically shoot up. If you are over a certain age, for example, if you are 45 years old, then you will be considered high risk on the road and your premium will increase. If you have any previous accidents on record and claims then again, your premiums will increase.

What should I consider when buying auto insurance?
What should I consider when buying auto insurance?

Loan

If you have purchased a car on loan then you will have to buy collision as well as comprehensive coverage because the lender will always like protection if the car is damaged in an accident. Collision coverage will pay for damages to your car if the accident was caused by you. Comprehensive coverage will pay for damages that were caused by anything other than a collision or an auto accident like fire, vandalism or theft.

Deductible

There are many people who are unaware of the fact that a deductible actually affects the premium on the auto insurance policy. How? Well! If you pay a high deductible initially for your collision and comprehensive coverage policies, which are normally expensive then your premium will be less.

A deductible is an amount that you will pay for repairs before it is paid by your insurance policy.

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