Car or auto insurance is something we all need, yet many of us do not fully understand. Whether you shop online or go through an agent, policies can seem complicated, and it is not always obvious exactly what you will be covered against. There are many unfamiliar policy terms and pieces of information that are not always easy to understand while many of us have ill-informed beliefs about what may cause our insurance premium to rise or fall. Below are some of the most important facts you should know about car insurance before applying for your next policy.
It used to be that you’d have to go to an insurance broker’s office to sit down and discuss your insurance needs. However, since the advent of the internet people have been able to use comparison sites to do the legwork for them. This means you can simply sit at your computer, input all your details, and almost instantly receive quotes from many top insurance providers. You can sit and compare the top choices and see which suits you. However, it is not always entirely clear exactly what has affected your quote or what you could do to bring the quote down, as these things are usually buried in legal jargon further along the process. If you know what you are looking for, these comparison sites can indeed be a great tool.
What Might Affect Your Quote?
So, what might actually affect your quote, bringing it up or down in cost? There are several factors at play here, some that you may be able to influence, and some you may not. Let’s break down a few of the most common price-influencing factors.
- Where you live can affect the price of your insurance. Unfortunately, insurers tend to look at areas as a whole when it comes to insurance. So, if you live in an urban area with a higher crime rate, you are likely considered at higher risk than a person in a rural area with less crime, car accidents, and thefts.
- Your age and gender are also considered. Insurance companies use data and statistics to decide how these affect policy prices. For example, statistics show that younger drivers are more likely to have an accident as they are less experienced. And, young men are statistically the most reckless drivers. Unfortunately, you can have little effect on how an insurer views you based on these features.
- Where you park your car can help or hinder your price point. We’ve already discussed the area you live in affects your price, but what about where you park? This is where you may be able to change your policy price point a little. If you park in a secured garage or parking facility, your price will likely drop. The same goes for private driveways. However, if your only option is street-side parking, your price will likely increase.
- Finally, the make and model of the car can have an influence. If you are trying to ensure an eight-liter supercar at the age of 23, insurers will view that combination as an extremely high risk. However, if you insure a 1.2L hatchback with excellent safety ratings, your risk level dramatically decreases. It’s important to consider the vehicle you are trying to insure.
Different Types of Cover
There are a few main types of insurance to consider. The first is liability insurance. This is a legal requirement in 49 of the 50 US States. Liability insurance covers any of the costs associated with injury or death caused to another driver while driving your car. It also covers any damages caused to other vehicles or property. This is why this type of insurance is mandatory, as it covers others who might be hurt by you. However, it doesn’t cover your vehicle. This is where optional insurance comes in.
There are two types of optional insurance that you can take out. The first is collision cover. This covers any damage to your car caused by a collision that is your fault, whether that collision is with another vehicle or a stationary object. For a more full policy, you can opt for comprehensive cover. Comprehensive provides you with any damage caused by anything other than a collision, such as fire, theft, flood, vandalism, or incidents involving animals. If you really want to protect your own vehicle, these are worth considering. Though, of course, the more policies you have, the more you will need to spend.
These are the key points you need to understand about car insurance. We hope you never need to use your policy, but it’s always best (and legal!) to have one. Stay safe on the roads.