A lot goes into finding an insurance policy. Although the internet may make it simple to compare rates and policies, that may not be enough. It’s easy to get tangled up by all the intricacies and terminologies insurance companies use.
Any long-standing myths and misconceptions you have about how insurance works may also cloud your judgment. For instance, many people believe that red cars cost more to insure for some absurd reason.
Well, that’s far from the case. Insurance companies consider several things when they set premiums for vehicles. These include the car model and make, age, body type, engine size, the cost of repair in the event of an accident, and the likelihood of it being stolen— not the color.
What usually drives up insurance rates are factors like accidents and speeding.
Below’s everything you need to know about car insurance.
Premium Price Determination
Every insurance company has its way of calculating the premium prices, but they use similar factors to arrive at the number. Some of these are your vehicle’s make and model number, how you use your car and your driving records. Other factors also include:
- Your gender, age, and marital status: According to statistics, young drivers who have less experience behind the wheel and male drivers are more likely to get into accidents. On the other hand, married drivers are less likely to file a claim.
- Your credit score: Many insurance companies consider credit scores when setting premiums. According to research, drivers with better credit scores have fewer accidents.
- Area of residency: For people living in urban areas with higher crime rates, the risk is much greater than a policyholder in a rural setting with less traffic and few break-ins and car theft.
If you want to know what sort of premiums you may pay, you can get an anonymous car insurance quote to put things into perspective.
You Can Pay Less for Auto Insurance
There are several ways you can lower your insurance bill. Some of the ways include reducing your coverage, for instance, opting to forgo a comprehensive cover for an old car, or raising the deductibles—what you pay before the insurance begins if you can’t afford the high out-of-pocket costs.
According to the Insurance Information Institute, raising your deductibles from $ 200 to $ 500 could reduce your comprehensive coverage and collision costs by 15 to 30 %. Going with a $ 1,000 deductible may save you 40 % or more.
Insurance companies also offer a discount for multiple cars, low-mileage safe drivers— those with no violations in three years, and students with excellent grades. You can also get a better price if you bundle your car and homeowner’s coverage with the same insurer.
Personal Car Insurance Won’t Cover Using Your Vehicle for Business
Almost all car insurance policies won’t cover your vehicle for business purposes. Many companies will cancel the policy if they find out you’re doing this. Suppose you use your car for any side gig— messenger, rideshare driver, or pizza delivery. In that case, you need to get a policy covering your extracurricular activities if you’re involved in an accident.
Talk with your insurance company and understand what coverage you can get to cover for business driving. The added coverage is quite reasonable and will typically cost around $ 10 to $ 20 a month, according to a survey done by NerdWallet.
Your Insurance Will Still Cover the Car Even If Someone Else Gets an Accident in It
The general rule with auto insurance is: The insurance follows the car and not the driver. If you give your car to someone else, you are essentially giving them your car as well as the insurance cover in most cases.
So if you’re in an emergency or too drunk to drive, you need to analyze the insurance implications of allowing someone else behind the wheel of your vehicle.
Letting Your Car Insurance Lapse Could Drive Up the Premiums When You Need It Again
You may be tempted to cancel your insurance policy when you don’t plan to drive for an extended period. It’s also relatively easy to forget to clear your bills. Regardless of the reason, if you let your coverage lapse, your insurance rates will go up should you need to get coverage again in the future.
Many insurance companies consider uncovered cars to have a higher risk than those who diligently keep and follow their policies. Even a one-day lapse in your coverage can lead to increased premiums.
If you won’t be getting behind the wheel of your car for a while because of whatever reason, have a chat with your insurance company and get to know the options you have.
You need car insurance. It gives you financial protection for your vehicle in case of an accident and some cover arising from claims from injured people during the accident. If you have a roadworthy vehicle, it’s required by the law that you at least get the basic level of cover—third-party insurance, even if you don’t drive your car often.
The only way to avoid this is to officially register your vehicle as an off-the-road one using a Statutory Off-Road Notification (SORN). If you drive without insurance, you risk getting fined at least six points on your driving license, disqualified from driving, and taking your car away.