Car Insurance

Why is Car Insurance important?

Auto insurance is a must for all car owners in USA. Without insurance you cannot buy a car. Without insurance you will not be able to get covered for accidents or damage to your car. Insurance covers damage to the other party's car for which you are legally responsible and any injury sustained during an accident. Insurance may also cover the cost of repairing or replacing your car it is damaged or stolen. Without insurance you will have to pocket all these costs yourself. In most states, it is mandatory to have auto insurance. Without the minimum auto insurance, as prescribed by state laws, your license may be suspended and you can be fined. In rare cases, your car may be impounded as well.

This article has two goals. The first is to review the factors that explain different rates of insurance in the market. The second goal is to explain the basic terminology used for auto insurance.

What determines Auto Insurance Rates?

  • New or Old Car: For a new car the auto insurance is normally higher than the old car.
  • Safety features: Cars with extra security features like ABS system get low rates.
  • Your driving experience: If you have fairly good driving experience you can get a better rate. If you have driven a car in another country, you must have your drivers' license as proof of experience.
  • Average rates for a new driver is around $600 to $700 for first six months. There is a lot of competition in this market and the rate you get will depend on the deal you get from the company agent.
  • Normally the insurance rate is higher for the first six months. Later the rate may go down if you have a good driving record. On the other hand, the rate may also go up if your record is not clean.
  • It can be a one-time payment or can be in monthly installments. If you pay one time, you might get some savings.
  • Review your insurance policy to understand what coverage you've purchased and how are you likely to be covered in different situations.

Basic terms about Auto Insurance:

  • Collision: Means coverage of your expenses due to collision.
  • Medical and Bodily injury: Means coverage of bodily injury, or death of any person.
  • Comprehensive Deductible: Means coverage of loss of your car, theft and damage due to any kind of natural disaster.
  • Towing means coverage for towing expenses during any emergency.
  • Rental Car Coverage: Expenses of rental car during the time when your car is in garage for any kind of repairs.
  • Property damage liability: Pays your legal defense cost and claims against damage of someone's property.

Tips

  • Talk to 2-3 insurance company agents. Make a comparative study of the rates. **Remember, there is scope for bargaining every where.
  • Take your insurance before going to the Car dealer, as without an insurance, you can't buy a car, and taking an insurance at dealers place could be costly.
  • Make a note of your car insurance agents contact information. Keep it in your wallet; You might need it at any time.
  • Always keep a copy of your car insurance papers in your car.
  • If there is some minor damage to your car like scratch, dent, you must report it.
  • Major insurance companies are Farmers, Geico , Progressive, Liberty Mutual, Mercury, etc.
  • Please have the following information available if you need to contact your insurance company about a damage to your car:
    • Your Full Name
    • Your Date of Birth
    • Your Social Security Number
    • Your daytime and evening phone numbers
    • State of Residence
    • Insurance Policy number(s)
    • Type of claim (collision, stolen car, death, disability, etc.)
    • If the claimant is someone other than you, please include the name of the claimant and your relationship to the claimant