Acquiring the right ideas on car insurance prices sets the proper perspective for car owners on how much they should prioritize this necessary expense. The owner has to understand that auto insurance policies protect him or her from substantial expenses in the event of an auto accident. Especially if he or she is the cause of the damage, responsibility for the losses lies on the driver that could include property damage, medical expenses, lost wages, and other expenses related to the injured person. Lawsuits can even be filed against the driver for the losses.
Without car insurance, other things of value that he or she owns such as house, savings and other assets may be sequestered so as to cover for the damage. Car liability insurance protects the car owner from all these overwhelming expenses. It can also include the payment for the attorney who would defend the driver against filed claims and lawsuits.
Covered physical damage
In addition to the coverage for the damages arising from the accident, a car insurance policy may also cover for the owner’s car repair expenses. Known as physical damage coverage, this policy can be categorized into collision coverage and comprehensive coverage. The former pays for damages arising from collisions with other objects. In this type, the insurer pays for the damages even if the insurance owner is the one responsible for the accident.
The latter, on the other hand, pays for damages arising from all other causes aside from collisions. Fire, vandalism, civic commotion, flood and other similar calamities are covered in a comprehensive package. Lost auto parts such as batteries and tires are also replaced when the vehicle is under this type of policy.
Factors that influence car insurance prices
Premiums to be paid for car insurance differ from one insurer to another because of the various underlying factors that these insurance companies take into consideration. Hence, it is important to shop first from various companies and compare their terms so as to come up with the best deals. In general, there are five factors that insurers usually consider.
Age, sex, and marital status constitute the first collective information affecting car insurance prices. Single male drivers, for instance, pay more since this group is most likely to tolerate greater risks. The location where the car owner lives is also another factor. Drivers in the metropolitan areas have higher premiums than those living in the rural areas where there is lesser congestion, hence, lower chances of getting involved in an accident.
Another set of information comprises the year, make and model of the car. High-end vehicles, in particular, result to higher premiums since replacement of parts in case of damage is relatively expensive. Older cars are also subject to higher premiums since the risk of damage goes up with age.
Frequency on the use of the vehicle correlates positively with the insurance premium. Car owners who accumulate more mileage are likely to pay higher premiums. Finally, records related to previous insurance coverage applied for also form another basis for setting the car insurance rate. Canceled insurance policies due to nonpayment can surely affect car insurance quotes unfavorably.
After the underwriting process
The car owner is classified by the insurance company under one of the three categories known as preferred, standard and nonstandard after the underwriting process is finished. The safest drivers are placed under the preferred category and are given the best quotes. To qualify for this category, drivers must have clean driving records over the past three years or so.
The standard category is reserved for drivers that carry moderate amounts of risks. Rates are, of course, a little higher than that of the preferred driver category. Family-type cars with clean driving records usually fall under the standard classification.
Finally, high risk drivers are classified under the nonstandard category and are given the highest rates. Typically, drivers under the age of 25 years with relatively lesser driving experience or with records of tickets and accidents fall under this type. A history of poor premium payments can also result to being classified as nonstandard.
Ways to lower car insurance prices
Basing from the factors that would likely affect the car insurance rates, car owners can seek and formulate effective ways to lower auto insurance premiums. First and foremost, safe driving is one action that the driver can always take to ensure favorable rates. Accumulating years of safety on the road can really help much in lowering the cost of the policy. In cases where there are accidents put on record, checking the accuracy of the information regarding the incident is the farthest action one can do so as to avoid unnecessary fees arising from wrongful data.
Prospective auto insurance buyers may also take advantage of discounts and programs offered by insurance companies. It is recommended to ask the insurance agent regarding possible insurance deals such as package discounts where a certain fraction of the premium is slashed out for insuring both a real estate property and a vehicle at the same time. Other companies also offer discounts for registering a multiple number of automobiles altogether.
For the members of the family who are still in school but are able to drive their own cars, discounts are also offered especially if these students demonstrate above-average grades in high school or in college. This privilege is based upon the fact that responsibility in the academe is more likely to extend beyond the classroom and into the actual road.
Safety features included in the vehicle can also result to better insurance deals such as higher coverage for medical expenses which can be as much as 40%. Air bags, antilock brakes, and automatic seat belts among others are the basic safety features recommended to be present in the insured vehicle.
By taking into account all these strategies to lower down the premiums, car owners are ensured of the best deals. In addition to these general tips, it is also important to first shop around for the best deals and not to rush the purchase of any insurance policy so as to acquire the most competitive car insurance prices.