Protect Your Car With These Speedy Insurance Tips
Maybe you have just begun the process of reducing your bills. Perhaps you just purchased your first vehicle. It could be that your insurance rates just went up.
Things happen and something brought you to Insurry.com to learn how to reduce your insurance rate or obtain the exact coverage you need.
Protect Your Car: US Auto and Motorcycle Insurance Needs
Each state in the US requires auto and motorcycle owners to insure their mode of transportation. The penalty for driving or riding uninsured varies from state to state, but most first offenses incur a hefty fine. A second offense typically results in the loss of your driver’s license and/or vehicle registration.
That may sound like tough love, but we have become a litigious society. We also lowered our driving license age requirements a few decades ago. The result was an increase in accidents. That means, the states just do what they must to ensure that drivers remain insured, so when an accident occurs, they have the financial means to pay for it if found at fault.
Since you cannot get around needing auto or motorcycle insurance, it becomes a challenge to find the cheapest coverage you can without sacrificing service. That is where knowing your way around insurance terms and coverage types helps you.
Let’s tackle the coverage types first since you need to know what a full-coverage policy contains so you can determine if you need it or if you can make do with your state’s minimum requirements or perhaps go with something in-between.
Protect Your Car: Coverage Types
In case you are new to auto and motorcycle insurance, let’s learn the meaning of that term full-coverage first so you can understand how it protects your car. When you obtain a full-coverage insurance policy from your insurance agent, you have a policy that includes every type of coverage they offer.
Typically, this includes collision, comprehensive, liability that covers bodily injury and property damage, and could include an under-insured/un-insured motorist, no-fault, vehicle rental, towing service and/or personal injury protection (PIP) coverages.
Collision
This type of coverage pays for damage to your vehicle as a result of a collision whether it’s a stationery object or another vehicle. If your car flips in an accident or incurs damage from a pothole, this also covers the damage. This policy option includes a deductible, an amount of money you must spend out-of-pocket before the insurance kicks in.
This typically ranges between $250 and $1,000. You choose the amount of the deductible, but the higher the deductible, the lower your premium, or monthly payment, will be. Whether the damage occurred due to your fault or not, this pays to repair your vehicle.
Comprehensive
When your vehicle incurs damage from a natural hazard or human actions such as earthquake, explosion, fire, falling objects, flood, hail, missiles, riots, vandals or windstorms. This also covers damage by animals and theft. This also comes with a deductible, typically $100 to $300.
Bodily Injury Liability
This is the coverage type that states require. It pays for the medical treatment and hospitalization costs of individuals that you, the policyholder, cause to another. You can list other drivers on your policy who regularly drive your vehicle, and they also receive liability coverage.
Property Damage Liability
Another state-mandated type of coverage, this policy type pays for damage you or another driver named in your policy cause to another person’s property. This does not just cover vehicle damage. It also pays if you drive through someone’s fence, knock over their mailbox, etc.
Uninsured and Underinsured Motorist Coverage
Some states require this type of coverage. It protects you from other drivers who did not obtain insurance as the law mandates or who do not carry a high enough level of insurance to cover the damages to your person or vehicle. It also covers your medical and property damage if you get hit by a hit-and-run driver, whether you are in your car or not. That means this insurance covers you when you are a pedestrian sightseeing, for instance, or out for a run.
Medical Payments or Personal Injury Protection (PIP)
This type of coverage pays for your medical bills and those of your passengers. Depending on the PIP options you choose, it can cover funeral costs, medical payments, lost wages, and service costs to replace those typically performed by an injured individual.
Now that you know the main policy types, you probably understand why many insurance agents recommend a full-coverage policy to protect your car. Sure, it earns them more money, but, they also see it every day that people who do not have the appropriate level of coverage have trouble recovering from an accident financially or medically.
Protect Your Car: What Coverage Do You Really Need?
You must consider your driving habits, frequency of use, who drives your vehicle, the times of day you typically drive, etc. This lets you determine if you could get away with just the minimum coverage or if you need full-coverage or something in-between. If you typically have many passengers with you, such as someone who carpools or drives the kids back and forth to football or soccer practice, it makes sense to carry PIP coverage.
The other individual may not carry enough insurance. Most minimum state requirements only make a driver carry enough insurance to cover injuries to two individuals or up to about $40,000 in medical costs. That would barely cover an accident in which you had one passenger, much less four or five or more.
Know your state minimum requirements. That lets you have a baseline for obtaining quotes. Most insurance sites default to offering a full-coverage quote first. They provide methods for you to customize the quote by removing various portions of the policy quote, such as collision or comprehensive if you feel you do not need them to protect your car.
Once you know what you need, you can move on to determining how to get the best price for the insurance coverage. Here are a few tips on how to do just that.
Car Insurance Tips: Obtaining Low Cost, Quality Coverage
Many ways exist to lower your costs while even increasing your coverage. Some might surprise you, like this first car insurance tip.
Bulk Discounts
You know how you get a better price when you buy bulk cheese or peanut butter. Car insurance works the same way. If you own several vehicles or need to insure many drivers at one time, you can earn bulk discounts. This bulk rate costs you less money.
Use the Same Carrier for All Insurances
Bundle your insurance types. You can obtain a better rate on nearly every type of insurance — auto, home, umbrella — when you bundle it and purchase it all from the same carrier. The discount amount depends on the company and the insurance type. Some companies offer a discount of up to 10 percent off of the auto policy while offering a larger discount of up to 25 percent on homeowners' insurance.
Drive Safely
You know those cute commercials about the driver who never speeds or runs lights because an app is tracking them, and they earn a lower rate for being gloriously safe drivers? They are accurate! Even before the days of there being an app for that, you earn a lower rate if you maintain a safe driving record. Tickets and especially DUIs/DWIs can increase your insurance rates though. Nowadays, the car helps you out.
When you look at buying a new car, go for the model that offers the best parking, backing, and collision avoidance assistance systems. Also, consider taking a defensive driving course from an accredited school. Safe driving can get you between at 10 and 23 percent discount from most companies.
Be a Good Student
Make your kids study and earn good grades. You laughed, but though I have no kids, I can tell you with certainty that insurance companies offer discounts to good students. Prove that your teenaged driver earns a B average or better in school or ranks in the top 20 percent of their class and you will receive a discount.
The amount depends on the company. Some offer one percent off while others offer up to 39 percent off. You still save money if your kid gets good grades. You do have to show proof of their school ranking or grades, so be the proud parent who makes a copy of their report cards like my dad used to do.
Always Compare Different Companies
Compare auto insurance rates. Hey, maybe you have been with the same company forever, but you still need to rate compare. Do this about a month or so before your policy renewal date. It is not ridiculous to expect to do this annually or at least every couple of years. Consider more than the cost though. Check out the insurance company to make sure it is financially viable and has a good reputation.
Drive Less
Ride the Bus or Subway: Make using mass transit a choice because it reduces the number of miles you drive your vehicle daily. The less you drive, the less the cost of your premiums. That is because you pose less of a risk for the insurer. Find out what your insurer’s mileage threshold is and remain under it.
Consider a Hybrid
Buy an alternative vehicle or hybrid. You can qualify for up to a five percent discount. Check to make sure your insurance company offers this type of discount which is almost as new as hybrids are.
Get a Small Car
Buy a smaller car. Large vehicles like SUVs cost more to insure. The insurance companies tend to like small cars built for economical commuting best.
Choose the Higher Deductible
You instantly reduce the cost of your premiums since, in the event of an accident, you are willing to pay more of the damage bill. To the insurance company that simply means you willingly reduced its risk to insure you.
Maintain a Good Credit Score
Head over to Creditry.com, so you can learn how to improve your credit rating and credit score. Insurance companies run your credit before deciding whether to insure you. They also use your credit score as a factor to determine your premium rate. Their reasoning is that if you show responsibility in your personal life, you probably show more responsibility while driving.
Location Is Important
Location, location, location matters. It simply costs more to insure a vehicle in some areas. You might see this in a city vs. rural juxtaposition or from one state to another. You might find that if you need to move to a new area due to a job transfer or school, you can obtain cheaper insurance by living either in the city or in the suburbs or the rural outskirts. Where you live when you move can save you lots annually.
Get an Anti-Theft Device
Check with your insurance company to see if they provide a discount for the installation of an anti-theft device to your vehicle. If so, install the anti-theft device, such as a car alarm or LoJack, so you can reduce your monthly expenses. Generally, companies offer up to 25 percent off of your insurance when you protect your car this way.
Use a Membership Discount
Research membership discounts. Many insurance companies have partnered with various companies or universities to provide discounts to their employees or students or alumni. Check with all organizations with which you have an affiliation to determine which ones offer a discount and with which insurance carrier.
Pay More at Once
Pay the premiums for the entire year at one time or six-months at a time. This can net you a nice discount. Paying one year at a time can sometimes save you up to 20 percent. Typical savings are about 10 percent.
Go Paperless
Sign up to do this. If you agree to receive all notices, documents, and bills electronically, many insurance carriers provide you a discount. It usually hovers around five percent.
Talk to Your Agent
If you did not have any luck with the first 15 tips or did not save enough, talk to your insurance agent. They know what savings are available. You might qualify for a military discount or something else.
Protect Your Car: How They Calculate Your Insurance Rate
You also need to know the many things that go into your insurance rate. You might be surprised to find out that your next-door neighbor and you could purchase the same make and model of vehicle, work at the same company and be the same age, but pay vastly different rates. Here is how that happens.
Each company uses a slightly different algorithm to calculate premium offers, but each uses the same specific factors to determine the rate. They weight the factors differently. Some things you can change. Some you cannot. Take a look at these car insurance tips and improve what you can, so you can lower your costs while affording higher coverage.
Driving Record
Your driving record tops the list of things that affect your calculation of costs. If you have previous moving violations or accidents on your driving record, the insurance company considers you to be a higher risk. If you and your spouse obtain auto insurance together, both of your driving record matters.
While married couples typically save by both obtaining insurance from the same carrier in a bulk purchase, this will not result in a lower cost if one or both spouses lost points off of their license.
Geographic Area
Living in a rural area usually gets you a cheaper rate on insurance since rural areas incur fewer accidents. Urban areas experience more claims than rural areas.
Gender and Age
Women typically get lower insurance rates because they become involved in fewer accidents. Men have more accidents, so they pay more. Teens cost a lot to insure while those in their 30s pay less. Your age group influences your premiums.
Marital Status
Getting married can provide you with cheaper premiums because married people get into less accidents and file fewer claims.
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Prior Insurance Coverage
You will usually pay a higher rate for premiums if your previous company canceled your insurance when you neglected to pay your premiums.
Vehicle Use
The more miles you put on your car each year, the greater the risk you create for the insurance company. Your premiums will cost more if you incur a higher annual mileage.
Vehicle Make and Model
In addition to the fact that smaller cars cost less to insure and hybrids get you a discount, other vehicle factors matter, too. You will pay higher premiums if you choose a luxury or sports car. This incurs a higher number of claims.
Protect Your Car: In Conclusion
Numerous factors go into the premium calculation for your insurance. You can earn discounts on your premiums in 16 different ways. After that, improvements to your driving record or a change in the type of car you drive can further lower your costs. You can raise your level of coverage without raising your costs significantly. Call your insurance agent today to learn more about how to make your auto insurance more affordable.