Buying your dream car is exhilarating. Purchasing insurance coverage for the dream car? Not so exciting. Auto insurance is confusing to beginner and experienced drivers alike.
There are just too many questions with elusive answers. Are you underinsured? What type of coverage do you need to be on the safe side? Can you get a better deal elsewhere? What factors affect your auto insurance rates?
These are just some of the pertinent questions you must answer as you shop for the right insurance coverage for your car.
I will agree that shopping for auto insurance coverage is not exactly how you’d like to spend your spare time. However, don’t dispense the value of a little leg work before you make a commitment.
With a little research, you can find the right car insurance for your lifestyle, and save big while at it. Also, you’ll steer clear of crooks and bad insurance companies.
In today’s post, we cover seven factors to consider when choosing car insurance.
Best 7 Tips to Choose the Right Car Insurance
The following factors (or tips) are arranged in no particular order. All the same, you can use the tips to determine the right insurance coverage for your vehicle, as well as save some money without compromising protection.
Understanding Your Budget
Currently (and with your overall budget in mind) how much can you spend on car insurance without breaking the bank?
I ask because you don’t want to underinsure in the name of saving a buck or two. Underinsurance does all kinds of bad things to your financial situation.
Without a doubt, you don’t to find out you’re underinsured in event of an accident that stretches your coverage limits.
What does that mean?
When insuring a car, it’s important to get more coverage as opposed to coasting by with the minimum protection required by your state.
With a budget in mind, you understand how much you’re willing to put towards various car insurance policies. As such, you can spring for the sweet spot between affordability and adequate coverage.
Should the worst happen, you have peace of mind knowing your insurer has your back. It also means you don’t dig deep into your pockets on your (God forbid) bad day.
Aside: Factors such as age, marital status and gender will play a part when insurance companies determine your rates. Certain age groups, such as teens and people above 80 years, are considered riskier to insure, hence attract higher premiums.
If you’re on a tight budget, you can sign up for a higher deductible to get lower premiums. For the best experience, ensure you can raise the deductible when the time comes.
To lower your premiums further, pay annually or bi-annually instead of monthly. Many insurance companies charge more when you pay monthly.
What other factors will determine the type of car insurance you can afford?
Since we are talking about your car, it makes pure sense that the very thing you’re safeguarding factors into how much you end up paying.
Different types of cars attract different insurance rates. If I have a flashy luxurious automobile, I will end up paying higher premiums since the vehicle is simply costlier to replace or repair.
If, on the other hand, I go for a laid-back sedan to run about in town, then my insurance rates come plummeting down.
Interestingly, some cars attract thieves like magnet. There are particular car brands that are hotcakes for grand theft auto, and if you live in a crime-laden neighborhood (more about this in a minute), you’re insurer will charge you even more.
Then you have safety ratings to think about. If your insurance company thinks your car is less safe than other models, you’ll pay higher premiums.
If you can wing it, purchase generous insurance for your luxurious cars. If you’re on a budget, you’ll quickly see you didn’t need that flashy car after all 😊
Insurance is regulated at the state-level, and where you live has a profound impact on your car insurance rates.
In Michigan, for instance, the law requires that you have unlimited PIP auto coverage, which increases the premiums you pay.
Other states have different requirements in place, meaning you should check with your local insurance department for details.
State-sanctioned requirements aside, did you know rampant crime in your neighborhood is bad for your auto insurance rates?
Yes, neighborhood with high crime rates attract higher premiums since there is the increased risk of theft and vandalism. If you fit your car with security features, however, you can lower your insurance rates.
Also, if you live in a densely populated areas with many cars (meaning there is more likelihood of accidents and injuries), you’ll pay more than, say, a guy living in a countryside farm town.
The same applies for areas susceptible to natural calamities such as earthquakes, hurricanes and so on.
If you’re moving to a different state, it’s great to know if you will enjoy lower premiums or prepare for higher rates.
Your Driving History
Bad drivers have qualms when you starting talking about their driving history. But insurance firms will have none of that. If you have a driving history that would make Satan jump off his seat, you’re getting higher premiums buddy.
Some companies may even refuse to cover your car outrightly because you’re too risky a prospect. So, if you have the bad habit of racking up speed tickets, DUI’s, racing, driving without insurance, and all manner of reckless driving – please just stop.
You’re not only putting your life and other people in danger, but you’re also working against your insurance premiums. And what happens is your premiums keep increasing and things just spiral out of control from there.
With a good driving history, getting the perfect and affordable insurance package is easy. It’s all smooth sailing since the insurance company loves to keep you as a client. Plus, they offer you incentives such as discounts for your good behavior.
If you insist on driving recklessly (shame on you), prepare to have providers running from you, or purchasing more expensive, non-standard coverage. Yeah, and more accidents. Is it worth it? Never. So, don’t shoot yourself in the foot; drive carefully.
The Coverage You Need
We use cars for all manner of activities. It could be for pleasure (which btw is how a majority of people use cars), or business purposes. Different scenarios play into how much you pay for the coverage you need.
In most states, you’re required to have liability coverage for your car. This type of insurance policy covers harm or damage that you cause to another person or property.
Along with liability insurance, there are other types of coverage to consider. Collision insurance will pay for the repairs your car needs in an accident you caused.
If you park your car on the curb and a branch of tree smashes your windscreen, you’d need comprehensive insurance for that sort of thing.
You also have personal injury protection (PIP), which covers medical costs not covered by a person’s health insurance, no matter who caused the accident.
The point is there are several types of car insurance coverage from which to choose. Don’t go with the bare minimum since you’ll get minimal protection.
Keep in mind that the more coverage you get for your car, the higher the premiums. Still, it’s extremely important to have adequate insurance to protect you and your family.
Your Credit Ratings
Are you a tax evader? I hope not. Do you pay your bills on time? If you’re an experienced driver, do you pay your auto insurance premiums on time? Are you paying off your credit card, mortgage and other loans on time?
If you are, well and good; that’s commendable and insurance companies want to reward you with lower insurance rates.
If not, and your bills are piling up, insurance companies will charge you higher premiums because your profile screams risky.
Credit scores are used in many financial institutions to determine whether you’re eligible for their products. If you have a bad credit score, banks will deny you loans for instance.
In the eyes of an insurance agent, a bad credit score will make you look like a risk to insure since you’re not trustworthy and don’t pay premiums on time.
Worse still is if you’ve previously had your auto insurance cancelled due to non-payment. Most insurance companies won’t provide cover to drivers with bad credit rating.
So, pay off your loans and pay bills on time. Work on improving your credit rating, and your auto insurance rates will be lower.
Ask for Discounts
Ask and you shall receive they say. Unknown to you are a number of car insurance discounts. With the right combo, you can slash hundreds of dollars from your annual premiums using discounts.
Insurance companies offer clients all manner of discounts, so when you have the chance, never hesitate. Just pop the question and let your agent guide you. You might be eligible for a range of discounts such as:
- Multi-policy discount
- Paid-in-full discount
- Good driver discount
- Paperless billing discount
- Good student discount (ages 16-25)
- Safe teen driving discount
- Et cetera
Certain restrictions apply, of course, but don’t hesitate from seeking out car insurance discounts whenever you’re purchasing or reviewing your auto insurance policy.