What are the top 7 facts to know about auto insurance? – Buying auto insurance is complicated online or through an agent. While the internet makes comparing policies and rates easy, insurance company lingo can be confusing. Insurance myths cloud the decision-making process.
Many people think red automobiles cost extra to insure.
“Nope. Loretta Worters from the Insurance Information Institute believes that speeding and accidents drive up premiums. If you drive a red car and speed, get a ticket, or have an accident, those are reasons for a rate rise, not the color.
Insurance companies consider make, model, age, body style, engine size, cost to repair, and likelihood of theft when establishing premiums, but not colour.
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Seven auto insurance facts.
Pricing
Each insurance company has its unique premium calculation, but they all use the same core factors. These include the car’s brand and model, how you use it (do you commute?) and your driving record.
Other factors:
- Young, male, and unmarried drivers are more likely to have an accident. Married drivers file fewer accident claims.
- Living: A policyholder in a high-crime urban region is a larger risk than one in a rural area with less traffic and fewer car thefts and break-ins.
- Score: Insurance companies can evaluate credit ratings in various states. Better credit means fewer accidents, industry research suggests. Consumer advocates say this unfairly penalizes low-income car owners and want it banned.
Crash vs. comprehensive insurance
This is the most confusing aspect of auto insurance. Many don’t know what they’re buying.
68 percent of Americans believe their comprehensive policy covers collision damage, according to InsuranceQuotes.
The III says:
- Comprehensive: Covers theft and damage from non-collision incidents like fire, flood, vandalism, hail, falling rocks or trees, or hitting a deer.
- Accident: Reimburses you for damage to your automobile from a collision you cause with another vehicle or object (like a tree or guardrail). It covers potholes and automobile rolls.
- Comprehensive and collision insurance are optional. Liability insurance covers injuries, deaths, and property damage you or another motorist inflict while driving your car.
Insuring a more costly car isn’t always more expensive.
When buying for a new car, it’s crucial to compare insurance costs for different models.
Penny Gusner, consumer analyst for Insurance.com, says a costly SUV may have fewer accidents or thefts than a cheaper car, resulting in reduced premiums.
Auto insurance might be cheaper.
Seven auto insurance facts. – Your insurance bill may be reduced in numerous ways. This sometimes means cutting coverage. An outdated car may not need full coverage.
If you can afford the higher out-of-pocket expenditures, raising deductibles is another money-saving approach. The III says:
- Increasing your deductible from $200 to $500 might lower collision and comprehensive costs by 15 to 30%.
- Saving 40% or more with a $1,000 deductible.
- Low usage, several automobiles, reliable drivers (no driving offenses in three years), and good students can get discounts. Bundling auto and homeowner’s insurance may also save you money.
Personal auto insurance doesn’t cover business use
Most policies prohibit business-related personal vehicle use. If discovered, many companies will cancel your policy.
“If you do any kind of side gig — pizza delivery, messenger, ride-share driver — make sure you’re covered,” Gusner added.
Get a “endorsement” for business driving from your insurer. Lyft and Uber drivers have strong coverage when they have a passenger. They’re at risk while waiting for the next rider. According to NerdWallet, a business usage endorsement costs $10 to $20 a month.
If someone drives your car and has an accident, your insurance will pay.
Insurance follows the automobile, not the driver.
If you lend your automobile to someone, you’re usually also lending them your insurance, says Esurance’s vice president of product design.
Unless it’s an emergency or you’ve been drinking, consider the insurance ramifications of letting someone drive your car.
Letting your car insurance lapse could raise the cost when you renew.
When you won’t drive for a while, it’s tempting to cancel your vehicle insurance. Bills are easy to overlook. If you let your insurance lapse, your future rates will be higher.
Esurance said in a blogpost that uncovered drivers are a bigger risk than those who maintain coverage. Even a one-day gap can raise rates.
Contact the insurance company if you won’t be driving the automobile for a long.
Best auto insurance prices
Insurance is like any other purchase: Comparison shop for the best deal. Each insurer’s underwriting policy affects prices. Insurance Quotes, Esurance, and Insurance.com compare policies.
Worters at the Insurance Information Institute said insurance costs can vary by hundreds of dollars a year. Find a car insurance company that has an excellent reputation, affordable premiums, and helpful staff.
Consumer Reports recommends checking auto insurance rates every two or three years. By comparing more than two insurance, you’ll save more, say the editors. When your personal circumstances change, such as getting married, divorced, or moving, shop the market.
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