[edit] Car Insurance
In the most basic sense, auto insurance policies are made of six different types of coverage. The required coverage varies from state to state but all do necessitate either a minimum liability policy or proof that a person can pay specific amounts if bodily injury or property damage occurs.
[edit] The six automotive coverages include:
Bodily injury Liability: If someone is injured and killed by your vehicle, this coverage pays legal costs and claims.
Collision: This coverage pays for any repairs and damages caused by a collision with a vehicle, object, person, or property.
Comprehensive Physical Damage: If your car is damaged due to fire, hail, theft, vandalism, and other reasons along these lines, this coverage will pay for repairs.
Medical Payments or Personal Injury Protection: This coverage pays any medical expenses incurred if you or others riding in your car are injured. It also covers you and other family member’s that are injured while traveling in another person’s vehicle or while walking.
Property Damage Liability: If property is damaged by your vehicle, this coverage pays for legal costs, claims, and the other person’s damaged property. However, it does not insure your property or automobile.
Uninsured or underinsured motorist: If you, your family, or other person’s riding in your vehicle are injured or property is damaged by an uninsured, underinsured, or hit-and-run accident, this coverage will pay out damages.
[edit] The Insurance Information Institute (III) recommends $100,000 of bodily injury coverage per person and $300,000 per accident. If your personal net worth is over $300,000, III also advised against buying additional liability insurance so you don’t get wiped out.
Check with your state laws and regulations to see which coverage’s are necessities where you live.
In general, there are a wide variety of factors that go into calculating an auto insurance premium. No one calculation is the same. However, it is noted that the package and options chosen certainly affect pricing – the more coverage, the higher the premium.
[edit] Some other factors that heavily influence insurance prices are:
• Vehicle type: Make, model, year
• Number of insured vehicles on policy
• Car usage or purpose
• Current average national costs to treat medical injuries and auto repairs
• Company cost to adjust claims
• Inflation
• Location: Insurance for city driver’s is more expensive than that in rural areas.
• Driver’s: Number of insured driver’s on policy; Ages of driver’s; Gender’s; Marital status
• Coverage Limit – Or the highest dollar amount insurance company will pay out to cover loss; more coverage, higher company will pay but also the higher your premium
• Deductible – Amount you’ve agreed to pay out of pocket when a claim is made. For example, if damages equal $3,000 and your deductible is $500, then you pay the first $500 and company covers the remaining $2500. If said accident results in $500 in damages or less, you pay whole thing out of pocket. The lower the deductible means the less out of pocket expenses you might incur but the higher the premium for the added coverage.
• Driving record – The insurance company will acquire all driving records from the Department of Motor Vehicles (DMV) and then evaluate the last 36 months. The cleaner the record, the lower the premium and the better the discounts.
• Insurance score - Based on information found in your credit report, this an excellent predictor of future behaviors for the insurance company. They will pull your credit report and take a look for long established relationships with credit lenders, low debt balances, low number of recently opened accounts, lower number of requests for higher credit limits or additional credit, bankruptcies, judgments, collections, and delinquencies. These are then added together and given an overall rating.
These factors, along with some others, are used in a general calculation to get your personal auto insurance premium.
[edit] Though having all of these coverage’s is worthwhile, it can also get expensive. Auto insurance companies have come up with ways to reward good behavior with discounts and tips on how to save money on insurance.
• Comparison shopping
• Discounts
• Nix comprehensive and collisions on older
• Higher deductibles – Though you pay more out of pocket if a claim does occur, a higher deductible can significantly reduce costs. Just a jump from $500 to $700 can save policy owners up to 30%.
• Get a car that’s under the radar – Choosing a car that is low maintenance and isn’t a constant target for auto theft will reduce your insurance costs significantly.
|
