According to conventional advice, drivers should purchase as much motor coverage as they can afford. However, that advice isn’t very helpful unless buyers know how insurance works. In this guide, drivers can get some valuable information on auto insurance.
Sometimes, the Cheapest Coverage is the Most Helpful
Legally-required coverage, such as liability insurance, is typically the most expensive type. Although coverage limits may seem low, they still leave insurers responsible for thousands of dollars in damages for each accident. However, most other coverage types are capped according to the vehicle’s value. Collision, comprehensive, and uninsured motorist coverages can all pick up where basic insurance leaves off, and they can provide peace of mind to budget-conscious drivers.
Various Factors Affect Auto Insurance Rates
Insurers use a range of criteria when evaluating insurance applications. All companies have limits on the types of drivers they’ll accept and, in some cases, they may charge certain groups a higher rate. The rules are different for each insurer, which means a driver could get widely varying quotes. Generally, though, insurers evaluate a driver’s motor vehicle record, insurance history, and other factors when determining the rate to be paid.
Insurance Rates Vary Significantly by Company
Car insurance premiums can vary widely among companies. Each insurer uses a proprietary risk assessment formula to decide what drivers pay for coverage. No two prices will be identical, and if a driver doesn’t compare quotes, they could wind up spending hundreds of dollars unnecessarily.
Coverage Lapses Can be Expensive
Most insurers view uninsured drivers as irresponsible. Therefore, if a driver allows his or her policy to lapse, they’ll pay more the next time they buy coverage. To avoid paying too much, drivers should buy another policy before the current one is canceled.
Higher Deductibles Equal Lower Premiums
The price of auto insurance depends on how much money the insurer believes it may have to pay on a claim. If a driver raises his or her deductible, it tells the insurer they won’t have to pay as much in the event of a loss.
All of these factors can affect the insurance quotes a driver receives. Therefore, it makes sense to consider coverage when buying a new vehicle. Rates are based on other factors as well, and some drivers may pay a bit less or a bit more than someone else driving a similar vehicle.