Car insurance buying tips
Planning to buy auto insurance? To get the best policy and the best deals, here are some top tips for you.
Identify the types of coverage available
Understanding the options available in terms of coverage will help you buy the insurance most suited to you. Health and asset protection are the two primary objectives of any automobile insurance. It is important to choose the right coverage option. Here are some of the basics:
Liability: If there is any damage to the third party, any injury, death, or even the damage to the property owned by the other person resulting from the accident from your automobile then it will be covered under this. Liability coverage is the most basic and mandatory coverage for all car insurance policies.
Collision: In the event of the accident the damages sustained by the car will be covered by the insurance company for the repair. Especially if you have a car bought on loan the insurance will provide repair coverage. This is because the bank still owns your car and not you, until the loan has been paid off.
Comprehensive: The damage caused by water, fire, vandalism or theft is covered under this. This is a great option for those who do not pay large sum of money in case of damage or theft.
Understand how insurance rates are determined
Underwriting and rating are the two factors that determine how much you will need to pay for the insurance. The process of underwriting involves evaluation of the associated risk with the particular applicant.
- Based on the results the insurance company can determine whether they can provide the insurance to the applicant or not. The underwriting process then becomes the basis for the rating. The rating further determines the cost of the insurance and the maximum amount of claim that can be made.
- The rating systems may vary with the insurance companies. However, there are a few general rules each company has to follow. The rating is largely influenced by the frequency of the claim. But this is not about how many times the claims have been made.
- The applicant is put in a group based on underwriting. The number of claims made against the total number of policies within the same group forms the basis. The higher the claims the more will be the insurance coverage fee.
Avoid the factors that determine the insurance rates
Here are some of the factors that determine the insurance rates.
- Your record of driving: The drivers who have been involved in accidents or violations previously are considered to be at a higher risk. This may increase the insurance rate.
- Your location: More claims are made in the urban areas as compared to the rural areas. Therefore, the prices may vary.
- Age and gender: Age and gender also affect insurance rates. It has been observed that males are involved in more number of accidents. Also, more claims are made by the people belonging to a certain age group.
- Marital status: Statistics show that the people who are married make fewer claims. This is because they drive more carefully.
- Previous insurance policies: If your previous insurance has been canceled because of the non-payment of the premiums then you may have to pay a higher insurance rate.
- Use of vehicle: People who use vehicle more are considered to be at a higher risk. Therefore, the insurance coverage prices may increase.
- Type of vehicle: The make and model of your automobile affects the insurance coverage rate. People with sports car are at higher risk and hence have to pay higher price.
Do not forget to ask for discounts
There are many insurance companies out there and the competition is pretty tough. To lure more customers, some companies even offer discounts.
Especially if you are a low-risk customer you will have better chances of getting the discount. Some of the discounts you can look for are:
- Multiple vehicles
- Good student
- Low mileage
- Anti-theft devices
- Driver education courses
- Safety devices.
Buy with the reputed company
- The insurance coverage fee is more or less the same for all the companies. What really matters is the kind of service the company is providing. There are some companies who are known to pay less. They usually use deceptive evaluation systems.
- There are some companies who do not provide prompt services. You request may go through the bureaucratic web before it is addressed.
- Look for the company which has a good reputation in terms of fair claims as well as good service. Thankfully, there are such companies around.
Get quotes from different companies
To get the best deal on the automobile insurance, do not finalize the agreement with the first company you come across with. Talk to the agents of a few of them. It is best to get the quotes from at least 3-4 companies.
The comparative analysis of the prices will give you a good standpoint for a bargain. Go for the company with good price and good service both
Know your policy well
It is extremely important to know that an insurance policy is a legally binding contract. You must be aware of your rights and responsibilities as well as those of the company. Read the policy carefully and not just skim through. Understand what it actually entails.
Certain things written in fine prints may have some serious implications at the time of the claim. If you are not sure, it is best to call the insurance agent for clarification.