Owning a first car is an exciting time in anyone’s life. From having unlimited freedom to experiencing a type of convenience most people around the world can only dream of — it’s certainly not something that should be taken for granted.
With owning a car though comes the responsibility of insuring that vehicle. You want enough coverage to repair someone else’s car in the event you’re at fault in an accident, or to repair your car if its vandalized or broken into. But, if you’ve never purchased auto insurance before, there’s probably a lot you’re confused about.
So use this article as a guide in understanding all the elements of auto insurance and use our online auto insurance comparison portal to see which providers are offering the best rates.
A premium is a monthly fee drivers pay for their vehicle to be insured. Premium costs couldn’t be more different from driver to driver, and even provider to provider. They largely depend on your age, gender, driving history, type of car you drive, as well as where your car will be parked and driven to on a regular basis. Premiums payments are generally made in monthly, quarterly or annual installments.
A deductible is the amount you’re required to pay out of pocket before your coverage kicks in. If you set your deductible to a higher amount, you’ll pay a cheaper premium as a result. Likewise, if you set your deductible to a lower amount, you’ll pay a higher premium.
Coverage levels are determined by the amount you would need to replace your vehicle in the event it’s totaled beyond repair, and are usually divided into three numbers. The first two numbers being related to medical coverage (the first per person, and the second for all people involved), while the last number concerns property damage.
So, the following coverage line of 80/150/50 means that a policy pays up to $80,000 per person in medical coverage, $150,000 for everyone’s medical coverage and $50,000 in property damage. Let’s get into more specifics below:
If your vehicle gets damaged as a result of theft, vandalism, weather or an animal encounter — comprehensive coverage will absorb your losses after a deductible kicks in.
Know Your State
It’s a big county, and each state will differ a bit in the financial responsibility they require from drivers. Whether it’s a minimum amount of car insurance, or being a victim of living in a state with a high concentration of uninsured drivers, what you’ll pay for auto insurance mostly rests on your state laws. Check out the minimum car insurance requirements by state here.
Do your Research
The more research you do, the more likely it is you’ll find an auto insurance company that will treat you as a person instead of a policy number. Sites like J.D. Power and A.M. Best Ratings shed light on a company’s reputation and provide a variety of statistics on how they all stack up against one another.
Tips for Savings
If you already have renters, homeowners or a life insurance policy with a particular provider, you can save a good amount on your premium by bundling your auto insurance policy. Having a clean driving record, safe vehicle and no prior claims with other insurance companies will trim the costs as well. Of course, as mentioned earlier, there are plenty of factors you can’t change. So be strategic and strive for a balance between adequate coverage and affordable premium rates.
Now that you have all the basics of auto insurance comparison, check out CoverHound’s auto insurance policy calculator to learn about the best policy rates and coverage suited to your needs!