Every car you see on the road has auto insurance because it is so important to have one. The risks of getting into a car accident are so high, that driving without auto insurance would be giving your money away for repairs and medical treatments. Since every vehicle and every driver is different, the industry of auto insurance has turned into one complex pit of confusion. And if you don’t know some of the most important facts about auto insurance, you might get into this costly, complex pit of insurance confusion.
This article will present every important fact you need to know about auto insurance, from the basic information to some of the most hidden tips and tricks. Not only will these facts help you become a more informed driver, but will also help you save a lot of money. But before we get into that, let’s know some basics of auto insurance.
Basics of Auto Insurance
Auto insurance is made mandatory in almost every state in the US. Every car that is driven legally on the roads must have liability insurance coverage with the equal or above state-prescribed minimum coverage limit. Let’s uncomplicate this.
Liability Insurance: Liability insurance is sometimes also called third-party insurance and this policy does not cover your vehicle. If in an accident you hit someone else’s car or damage their property, you are liable to pay for the repairs or medical treatment. But what if you don’t have enough money? Who’s gonna pay for it?
This is the reason why liability insurance is mandatory in almost every state and it covers the cost of repairs or medical treatment of the other person. You cannot claim your liability insurance.
Apart from liability insurance, there’s collision insurance that protects your car from accidental damages, regardless of whose fault it is. So if you hit someone’s car or someone hits yours, collision insurance will cover the cost of repairs for your car.
Personal injury protection insurance covers the cost of medical treatment for yourself, while an underinsured motorist insurance policy compensates if the liability insurance coverage of the person at fault is not enough to cover the cost.
Comprehensive insurance coverage protects your car from natural calamities, riots, vandalism, theft, projectile damage, etc. And that’s all the basic information you need to know about auto insurance. Now let’s jump to the factors.
Facts Every Driver Should Know
Where Your Park Matter
When buying insurance, the insurance company will ask you the area your car will be parked. But this does not make any sense right? Why should they be concerned about the parking area? Well, cars parked in areas with higher crime rates, robbery, theft, and accidents have a higher risk of getting damaged. This means that there’s a higher risk for an insurance claim. So the insurance company will charge more for the insurance and premiums to offset the risks.
Even Asking About Accidents Can Increase Insurance Rates
Getting in an accident and making an insurance claim will increase in higher insurance and premium prices. This is common knowledge, but did you know that even if you don’t make an insurance claim, but just let the insurance company know that you have been in a minor accident, you are likely to see an increase in the price of the insurance premiums.
Insurance companies are risk management companies, and if they know that you have been in an accident, regardless of whose fault it was, the insurance company would see you as a high-risk element. There are many reports when users just called their insurance companies to ask if they should make a claim or not, and even though they did not make a claim, there was an increase in insurance rates.
Get Great Discounts
When choosing your auto insurance, you should always look for an affordable auto insurance company. But even the company that you have already chosen will give you insurance at a discount if you ask them to. There are always many great discounts, like good student discounts, veterans’ discounts, etc, or even general discounts that can and will get your insurance rates lowered if you try. So talk to the agent, ask them for a reduction and that’s it! You saved yourself some extra dollars.
Can’t Get Insurance Driving Someone Else’s Car
Let’s say that you have an auto insurance policy, say liability insurance and collision insurance. You have that policy for your registered car. But did you know that your insurance company can deny an insurance claim if you crash a car that is not registered to your name? This is because a car that’s not registered to your name is not yours, and if it is not yours, it’s not your insurable interest.
Factors that Affect Your Insurance Rates
It is common knowledge that your driving record and previous insurance claims will increase the cost of premiums and insurance. But there are some other, seemingly unrelated factors that affect auto insurance rates.
For example, auto insurance is affected by:
- Age: Older people get lower rates because of the driving experience
- Gender: Statistically, women are less likely to be in an accident, and hence, get cheaper insurance rates.
- Credit score: People with poor credit scores are more likely to miss premium payments, this is why a poor credit score will result in higher premium prices
Insurance Lapse Will Increase Rates
If you previously owned auto insurance but for some reason had to halt it, or cancel it, it could increase the cost of insurance. Even if you did not drive your car during this period, insurance companies view insurance coverage lapse as a high-risk factor. So try avoiding any lapse, and always have an auto insurance policy.