| Car insurance is an inevitable fact of responsible driving. In the event of an accident, (your fault or someone else’s) car insurance may save you from financial ruin. At the very least, car insurance brings peace of mind and keeps you on the right side of the law. The drawbacks? Car insurance can be expensive and the language confusing. It’s best to shop around and ask questions to understand what you are getting, and to get the best deals.
Ideally, you will never have to file a claim. But if you do, you will considerably improve your satisfaction with the process by doing thorough research at the outset.
Begin with an understanding of the following terms:
- Bodily injury (also called liability): Offsets costs related to the bodily harm and property damage of the other driver(s) when you are at fault in an accident. Insurance companies impose limits on the amounts that they will pay to the victim(s), and for each accident.
- Collision: No one wants to have an accident but, if you do, your medical expenses and property damage will be covered if you select collision protection as a part of your plan (again, there are limits).
- Comprehensive: This coverage relates to damage, theft, vandalism, etc. Your losses are covered by comprehensive insurance if, say, someone breaks your car window.
- Uninsured/Underinsured Motorist: Some drivers do not carry car insurance for a host of reasons. If you have an accident with such a driver this coverage will provide some compensation for medical expenses.
Auto insurance can be very expensive, but it is more expensive to forgo. Many states arrest and/or fine drivers found to be uninsured. Additionally, accidents, theft and damage can create financial chaos for uninsured/underinsured motorists.
Choose a carrier that is reputable, accessible, responsive and financially solvent. You don’t need to be a detective or private investigator. Just check with family or friends and agencies such as Standard & Poor’s to get the information you might not get from the sales brochure or website.
In addition to the coverage and limits you select, your premium costs are related to a variety of factors including:
- Your credit history
- Your driving record
- Multiple line discounts (two or more cars and/or other policies, such as homeowner’s insurance with the same firm)
- Age
- Students with good grades may benefit from discounts
- Students residency (if you have a young driver on your policy, you may benefit from discounted rates if he or she attends school more than 100 miles from home)
- Associations (alumni or other group discounts may be available to you)
- Anti-theft devices and safety equipment, such as airbags
- Driver education courses
- Theft/Accident rates in your area and for your type of car
- Car make/model, year
- Driving distances (the theory is that the more you drive the more opportunities for accidents you will have
Rates can change with time and circumstance. Review your policy each time you renew, typically at six or twelve months, to make sure that your coverage and limits meet your current needs.
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