What to Know About Auto insurance

By Timothy Sexton

  • Overview

    The world of automobile insurance can make you dizzy. Insurance is an industry with the requisite terminology and jargon designed to confuse the consumer and strengthen the negotiating power of the salesman. It is hard to know what kind of insurance you really need, much less what that insurance will grant you in case of accident. There are a few very important items to keep in mind about auto insurance that applies industry-wide and will help you keep your sanity.
  • Identification

    The most important thing to know about auto insurance, or any kind of insurance really, is that you are not a person, but a number. To be more specific, you are a statistic on very complicated and confusing actuarial table that only certain people in the insurance business really understand. The kind of insurance you will be offered, the amount of premiums you will be required to pay, and the amount that is actually paid are all elements that are based on an almost endless number of factors that only begins with what kind of risk you might present, but also includes things like what kind of job you have and where you live. The good news is that the number is not set in stone.
  • Shop Around

    Because the process of determining premium payments and insurance values requires such complicated statistical analysis, the cost of buying the same cover can very significantly from company to company. This is the very reason that you see so many commercials claiming to cut your insurance bills a significant percentage.The process of determining the cost of insurance to drivers depends in large part upon how much risk the company is willing to take. A greater sense of risk means lower prices for you.

  • Premiums Aren't Everything

    Auto insurance is based upon monthly payments to protect against even an even greater expenditure of cash in the case of accident or repair. For this reason, most people will consider the lowest possible monthly payment as the best possible deal. While premium costs should be taken into account, it is important to research the company for customer complaints. Pay special attention to how often current and former customer complain about the speed and efficiency of having their claims inspected and fulfilled. Low monthly premiums mean nothing if you can't get a claim settled easily.
  • Higher Deductibles

    If you decide to go with a more reliable insurance company that results in higher premiums, there is still another way to lower them. The way auto insurance determines the amount of premiums is based on what they believe they will have to pay in the result a claim is filed. By raising the amount of your deductible you are in fact saying that you will pay a greater proportion of the cost of damages, which means the company's cost will go down. It's a gamble you might be willing to make because the immediately benefit is lower monthly payments up front.
  • Drive Safely, Earn Discounts

    How many automobile insurance commercials do you suppose air during an average day of television? The insurance game is highly competitive and every customer is in play. If you have a long history of avoiding accidents or not filing claims, then you deserve to be rewarded for lowering the risk. Many insurance companies automatically reward low-risk drivers because they want to keep them; if yours doesn't it, inquire. If you still can't get a discount, threaten to leave when your current coverage ends.
  • Choose Wisely

    The amount of automobile insurance you will pay is based to an extent upon the car you drive. Since it will cost more to repair an expensive car, premiums will be higher for Corvette than for a Taurus. Insurance companies also keep track of which model cars are stolen the most often, so expect to pay for the higher risk if you drive a car near the top of that list.
  • Coverage Counts

    You have to pay for liability coverage to meet legal requirements and so that part of your insurance is where most of your money goes. Any extra kind of coverage you pay for should be looked at carefully. While comprehensive coverage that kicks in no matter what happens sounds good, paying for collision coverage on an old heap really makes little sense economically. It pays in the long run to pore over every single kind of extra coverage that is offered by the company and consider it in terms not only of what you can afford, but whether you really even need it.
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