Anyone who has ever owned a car presumably knows a thing or two about auto insurance. It is a well known fact that in most states, it is illegal to drive an uninsured car and that every state has a set of minimum compulsory coverage.
Mandatory auto-insurance is normally limited to third party liability coverage. The minimum coverage amount is determined by law and varies from state to state. Nobody wants to be caught driving an uninsured car, for the penalty can be extremely high. There is also a chance of license revocation.
Insurance companies offer several coverage options on top of the mandatory auto-insurance. It is highly recommended you get some additional coverage as it better protects you from the cost of property damage and medical expenses if the accident is your fault. Lack of adequate coverage will allow the other party to sue you and put your personal assets at risk.
What optional coverage you eventually choose will depend on how much you value your car, what you expect from your insurance company and how prepared are you to pay for it. A few popular optional auto insurance(s) available are
o Collision – This plan covers damage to your vehicle caused by collision with another vehicle or object.
o Comprehensive – This plan covers loss or damage to the insured vehicle that doesn’t occur in an auto accident such as fire, wind, hail, flood, vandalism or theft.
o PIP – Personal Injury Protection (PIP) is a requirement in some states. It covers your medical expenses due to an auto accident regardless of who is responsible for the accident.
The key to shopping for the right policy is to know and to understand your auto-insurance needs. Most people buy additional coverage over the minimum mandatory state requirement. Your insurance needs can be determined by asking a few basic questions relevant to your car. How old is it? What is its resale value? What do you keep in it? Where do you drive it?
Once you know what to expect from your auto insurance policy, you must survey the market and identify the various options available to you. You can then pinpoint the companies which offer what you are looking for and compare the different prices offered to make decision that best suits you.
The pricing system of auto-insurance policies is really complicated. The price for the type of policy you may like to buy will depend on many factors and will definitely vary from one company to another. It depends on the type of the vehicle you drive and on the value of your car; the more expensive the car is, the more expensive the insurance is. Additionally, it depends upon where you live; if you live close to where you work your insurance will be cheaper than if you live further away. If you live in an area that has a history of car thefts, your policy will be more expensive than if you live in a safer area.
When buying a policy, you should always inquire what discounts are available and check if you qualify for them.
Buying auto insurance is not as confusing as it may seem. Remember all you need to do is outline what you need your insurance policy to cover and then look for an affordable policy which does that.