1. Why should you buy auto insurance?
2.Life insurance and auto insurance.
3.Choosing auto insurance company.
4.Changing auto insurance companies.
5.How to cancel your old auto insurance policy?
6.Be sure to get a new auto insurance policy first.
7.When to change auto insurance policies?
8.How long does it take to change auto insurance?
9.Types of auto coverage.
• Liability
• Collision
• Comprehensive
• Medical Coverage
• PIP
• Uninsured Motorist
• Underinsured Motorist
• Rental Reimbursement
10.Auto insurance cost.
11.Look for discounts.
12.Insurance for bad drivers.
13.Auto insurance for teenagers.
14.How much coverage do you need?
Why should you buy auto insurance?
If you cause an auto accident, you may be responsible for the losses of the other people involved. A claim may be made or a lawsuit filed against you for those losses. You may have to pay not only for the property damage you cause, but also for the medical expenses, lost wages, and pain and suffering of any injured person. The amount of money you may have to pay could be substantial. If you don’t have insurance, anything of value that you own, including your home, savings, future wages, and other assets, may be taken to pay for those losses. Auto liability insurance can help protect you so that this doesn’t happen. Liability insurance also pays for an attorney to defend you against any claim or lawsuit that may be payable under the policy. You can also buy insurance to cover damages to your auto. This optional coverage will help pay for your losses whether or not you were at fault. Insurance is based on the theory that only a small portion of all drivers will be involved in accidents. The premiums paid by all drivers during the year are used to pay for the losses of those drivers who have accidents. When you buy insurance, you receive financial protection in case you become involved in an accident. You also make sure that a person injured through your fault will recover for losses you cause.
Life insurance and auto insurance
The major difference between auto insurance risk and the risk associated with life insurance is that, while you can only die once, you can have many auto accident claims. And the details can be far more varied, with losses for things like liability, medical payments and physical damage.
Choosing auto insurance company
Before you pick the lowest price, check out the car insurance company itself. Your decision to pick a car insurance company must be based on a number of factors, including the car insurance company’s stability and your level of tolerance for risk. Just remember that the car insurance company is always going to be charging you based on a model which makes money for them.
Changing auto insurance companies
There are many reasons why you may choose to change your auto insurance coverage to another company. Perhaps you’ve found another company that offers you the same amount of coverage for considerably less money. You might have changed jobs and are eligible for a group discount through another insurer, or maybe you’re unhappy with the service that your present company provides.
How to cancel your old auto insurance policy?
Generally, all you need to do to cancel your auto insurance policy is to inform your insurance company in writing, specifying the date you want the policy canceled. In some states, the new agent must notify the previous agent of the policy change. Some auto insurance companies ask the policyholder to send back the actual printed policy. The insurance company will send a cancellation request form that will need to be signed and returned. Examine the form carefully to make sure that all information regarding the policy is correct. If the form is not received within two weeks of sending the letter, call the agent or company immediately to check on the status of the cancellation. Don’t just walk away from the old policy without formally canceling it. Each state requires that auto Insurance policies be cancelled with notice, thus the insurance company might assume one wished to continue the coverage, and it might eventually terminate the policy for failure to pay premiums and report the lack of coverage to the state Department of Motor Vehicles. This can hurt your credit rating and ability to get a new policy.
Be sure to get a new auto insurance policy first
Always have a new policy in place before canceling the old auto insurance coverage. Otherwise you might have a gap in protection for a day or more! Most states require all drivers to carry a minimum level of auto insurance and most insurance companies require policyholders to present proof of new coverage before they will cancel an active policy. The new company will be able to time the beginning of the new policy to coincide with the cancellation of the prior coverage.
When to change auto insurance policies?
1. At renewal. Renewal is a convenient time to change auto insurance policies, as you don’t have to wait for a refund from your current carrier. A renewal notice will be sent to you approximately 30 days before a new policy begins, depending on the regulations in your state. Should you decide to switch companies, you’ll need to have a new policy by the time the current policy renews. Though a company might say there is 10-30 days to get your payment in before a policy terminates, you do not have coverage until the carrier receives the payment. If you have an accident during this time period you most likely will have no coverage since the premium wasn’t paid!
2. Anytime. All Auto insurance policies contain a provision allowing you to cancel your policy with proper notice at any time. In a few states auto insurance companies “short rate” the policy that means one pays a penalty for canceling before the policy renews. Most insurance companies pro-rate their policies so there is no penalty. The advantage of switching before the renewal date can save you a lot of money. For example if you have a policy that runs from Jan 15th to Aug 15th and you have an accident or ticket that will be over 36 months on March 15th. By switching Auto insurance companies on March 16th, you get a discount for having a clean driving record. Your current carrier won’t apply this discount until the policy renews on August 15th! This can save you Hundreds of dollars immediately!
How long does it take to change auto insurance?
When you change auto insurance companies, the new agent or insurer can generally change carriers while you wait! Generally they’ll just need a copy of your current declaration page, driver’s license and down payment to get the policy issued.
Types of auto coverage
Everyone who drives needs car insurance. In fact, most states require it by law. When you buy car insurance, you are buying what is called a policy. Your policy is based on a variety of factors including what kind of car you drive as well as what kind of insurance you want. Auto insurance policies are actually a package of different types of insurance coverage.
The first step in understanding an auto insurance policy is to learn the various types of coverage insurance companies offer. Some of this coverage may be required by your state and some of the coverage may be optional.
• Liability - This coverage pays for accidental bodily injury and property damages to others. Injury damages include medical expenses, pain and suffering and lost wages. Property damage includes damaged property and automobiles. This coverage also pays defense and court costs. State laws determine how much liability coverage you must purchase, but you can always get more coverage than your state requires.
• Collision – This coverage pays for damages to your vehicle caused by collision with another vehicle or object.
• Comprehensive - This coverage pays for loss or damage to the insured vehicle that doesn’t occur in an auto accident. Comprehensive insurance covers damages that include loss caused by fire, wind, hail, flood, vandalism or theft.
• Medical Coverage - Pays medical expenses regardless of fault when the expenses are caused by an auto accident.
• PIP - Personal Injury Protection (PIP) is required in some states. This coverage pays medical expenses for the insured driver, regardless of fault, for treatment due to an auto accident.
• Uninsured Motorist – Pays your car’s damages when an auto accident is caused by a driver who doesn’t have liability insurance.
• Underinsured Motorist – Pays your car’s damages when an auto accident is caused by someone who has insufficient liability insurance.
• Rental Reimbursement - This type of coverage will pay for a rental car if your car is damaged due to an auto accident. Often this coverage has a daily allowance for a rental car.
Many insurance policies combine a number of these types of coverage. The first step in choosing the insurance you want for your car is to know the laws in your state. This will tell you the minimum insurance you need for your car. It’s good to keep in mind that, just because your state may not require extensive insurance, extra coverage may be worth the expense. After all, no one wants to be stuck with thousands of dollars worth of bills because of an auto accident.
Auto insurance cost
The cost of auto insurance varies greatly with a number of factors. All of these factors must be considered; both for yourself and any other drivers who will be insured on a single auto insurance policy:
- The location where you live determines auto insurance cost. Normally, you will pay more for auto insurance in urban areas and less for auto insurance in rural areas. However, an auto insurance company will take into account local statistics on accidents, thefts and lawsuit’s and the local costs of repair and medical treatment. You may want to consider this aspect when moving to a new location. High auto insurance premiums add up over time.
- Your age determines auto insurance cost. Generally speaking, if you are younger, you will pay more for auto insurance. Insurance companies play a ‘numbers game’ which work against younger drivers. Statistically, more experienced drivers have fewer accidents than less experienced ones. Younger drivers can mitigate this by being insured as an ‘occasional’ driver on their parent’s auto insurance policy.
- Your driving record determines auto insurance cost. The better your driving record is the less you should be paying for auto insurance. A ‘clean’ driving record (no accidents or claims) will get you the best rate. Keep in mind that for an auto insurance company, being insured and having no claims establishes you as low risk. If you are a young driver you should begin to establish a ‘clean’ driving record as soon as possible. Getting added to a parent’s auto insurance as an ‘occasional’ driver (or with various restrictions) ensures that a young driver’s auto insurance will drop in price as quickly as possible.
- Your gender determines auto insurance cost. Unless your jurisdiction has legislation that prohibites discrimination by auto insurance companies on the basis of gender women will usually pay less. Unfortunately, the auto insurance companies have figured out that younger male drivers have a higher risk of ‘at fault’ accidents.
- The model and make of car determines auto insurance cost. The flashiest sports car may not be the best choice if you want to pay low auto insurance rates. All insurers will consider the cost of the car, the cost of repairs, and the overall safety record of the car. Expect to pay more for faster, more expensive or ‘desirable’ models of cars.
- Theft rate of that type of car determines auto insurance cost. Keep in mind that some models are more prone to being stolen, even if they are not what we think as ‘flashy’. For instance, at one point Honda had a model which was frequently stolen and in high demand on the ‘black’ market. Toyota has had the same problem. As a result, it pays to check out the theft rates of any vehicle you are interested in. This can impact your auto insurance costs more than you’d think. If you are willing to put in a good security system you may be able to reduce or eliminate any extra premium you would pay for a theft-prone car.
- Deductible determines auto insurance cost. The deductible is the amount you are willing to pay out of your own pocket in case of an accident or claim. Overall, the higher the deductible the lower the cost of your auto insurance policy. You will have to weigh whether a lower cost auto insurance policy is better or more coverage is better. In general, if you have a good driving record consider a higher deductible. This is you gambling on you. Just be sure that you can afford that $500 or $1000 up-front if you are in an accident.
- Type and level of coverage chosen determines auto insurance cost. The more types of auto insurance coverage and the higher the level of auto insurance coverage the more you should expect to pay. While you may qualify for discounts it pays upfront to ensure you are not carrying auto insurance that you don’t really need. For instance, if you have an automobile club membership you don’t need that extra coverage for towing – it just makes sense.
Look for discounts
While talking to the insurance companies’ telephone salespeople, make sure you explore all options relating to discounts. Insurance companies give discounts for a good driving record, favorable credit score, safety equipment (for example, antilock brakes), certain occupations or professional affiliations and more.
Insurance for bad drivers
Insurance for bad drivers naturally costs higher. There are certain factors that determine your being a bad driver and may have an impact on your auto insurance:
1. Driving record. Your driving record is an obvious impact on your insurability. Everybody knows that at-fault accidents will increase your rates, but even tickets and not-at-fault accidents can too. Why? For every speeding ticket you get, your chances of being involved in a traffic accident rise by 100%, and being involved in multiple car accidents, (even if you’re “not at fault”) may suggest a pattern of reckless driving. Remember that insurance companies live and die by statistics and that means they aren’t looking at you as an individual. They are looking at the data on you and making a decision about whether you are a good risk or a bad one.
2. Personal profile. Your personal profile takes into account your gender, your age and other personal characteristics. Unfortunately, this is an area you can’t do much about, and it’s also ruled by statistics. Insurance companies will always consider men a greater risk than women, teens greater than adults and urban dwellers greater than rural folk. It’s all in the stats.
3. Continuous coverage. Whether you have carried auto insurance coverage continuously over the past few years will affect your ability to get a policy now. Continuous coverage establishes a record of your insurability , as well as proves that you’ve been driving with proper coverage. While it may not seem like a big deal to you, it’s a big deal to the insurance company.
4. Your credit history. Now this may not seem fair, but your credit is a factor that increasingly influences other areas of your life, including insurance. Statistics show that drivers with poor credit file more auto insurance claims, and so companies use this info to classify high-risk drivers. Again, insurance companies really like statistics, because this is the way they evaluate risk.
Auto insurance for teenagers
Car insurance for teenagers is rather expensive as drivers under the age of 25 pose the greatest risk to insurers because of their high level of at-fault accidents. Insurance companies seek to limit their exposure to this high level of risk by charging higher insurance rates for 16 to 24 year-olds than for any other age group.
One trick you can use is the same one that parents have been using for decades. It is possible to add a teenage driver to a parents existing auto insurance policy as an occasional driver; once that teen has a permanent drivers license. While this can still be relatively expensive compared to the cost of insuring an adult, it usually saves some money on the cost of insurance overall.
It may even be possible to get a discount directly on your teen driver, if you’ve invested in your child’s driver education. If your teen has taken a defensive driving course, this is likely to get you (and your teen) a break on the cost of insurance. It’s well worth the time and money.
How much coverage do you need?
To find the right auto insurance, start by figuring out the amount of coverage you need. This varies from state to state. So take a moment to find out what coverage is required where you live. Make a list of the different types of coverage and then return for the next step
Now that you know what is required, you can decide what you need in addition. Some people are quite cautious. They base their lives on worst-case scenarios. Insurance companies love these people. That’s because insurance companies know what your chances are of being in an accident, and how likely it is for your car to be damaged or stolen. The information collected by the insurance company over previous decades is crunched into “actuarial tables” that give insurance adjustors a quick look at the probability of just about any occurrence.
