Auto Insurance Companies
Everyone with a car needs insurance, but there are many different auto insurance companies to choose from and the providers are very competitive. Because auto insurance companies advertise so aggressively, it can be hard to choose the best company or even know what to look for. If a person isn’t careful when buying insurance, they may purchase a policy that will not cover everything they need it to, or they might end up paying too much for auto insurance. By taking some time to understand auto insurance, you can comparison shop for the best company to suit your needs.
Why You Need Car Insurance
The primary purpose of auto insurance is to pay for damage that you cause while operating your vehicle. All drivers are required to purchase an auto insurance policy in order to register a motor vehicle. This liability policy pays for damage and injuries caused in an auto accident and protects the driver from being sued whenever an accident does occur. Drivers who do not have auto insurance must pay out of pocket for damage or injuries after a car accident, which can become extremely expensive. They also run the risk of losing their license and paying a citation to the police if they’re caught driving without insurance.
Liability coverage is not the only purpose of auto insurance. Car insurance can also be used to repair the insured vehicle whenever it sustains damage. Depending on the coverage a person buys, the insurance will pay for damage caused by accidents, vandalism, weather and other perils. It may also cover the cost of medical care for an insured driver or any passengers in the vehicle. Some car insurance also pays for medical expenses whenever an insured is injured as a passenger in another person’s car or gets hit as a pedestrian.
Different people will require different coverage, and certain vehicles may require more insurance than others. In order to get the best value for a policy, a driver must understand what coverage he or she is paying for and exactly what that coverage does.
Types of Coverage
There are essentially two types of insurance coverage: liability and first-party insurance. Together, both types of coverage make up a full coverage insurance policy. Liability insurance pays for other people, whereas first-party insurance pays for the vehicle being insured. Liability insurance is mandatory in all states. In certain states, first-party injury coverage is state-mandated as well. Additionally, all vehicles that are leased or financed will require the insured to carry full coverage insurance until the vehicle has been paid off.
Liability insurance includes bodily injury liability and property damage liability. The first pays for injuries sustained by the other driver in a two-car collision as well as any passengers in that vehicle. It also pays for injuries to pedestrians or bicyclists who are involved in an accident with the insured. In some cases, bodily injury liability insurance also pays for injuries to passengers in an insured vehicle.
There is no deductible for liability insurance, but the insurance company does impose a limit for each accident. Any damage or injuries over the limit are the responsibility of the insured. Each state has its own required limits for liability insurance. If a policy drops below this limit, the insured may have to pay a penalty for carrying insufficient insurance; this penalty may include a driver’s license suspension, so it’s important to be sure that the policy carries at least enough insurance to satisfy the law. Most people prefer o carry more liability coverage as an accident may exceed the liability limits, especially if it’s severe or includes multiple people.
First Party Coverage
Collision coverage pays for damage to an insured’s vehicle whenever the car is involved in an auto accident with another vehicle, fixed property or a pedestrian. This includes damage caused to a vehicle when it’s parked and single-car accidents such as roll-overs. Collisions can be either at-fault or not-at-fault. In an at-fault collision, the insured is responsible for paying any deductible listed on the policy. If the insured is not at fault for his accident, his deductible may be waived or he might be able to recover it from the other person’s insurance company.
Comprehensive coverage pays for damage caused to a vehicle by something other than an accident. This includes vandalism, theft, weather and other similar perils. There is no liability assigned to a comprehensive claim, and the deductible is often lower than it would be for collision. The insured must always pay his deductible, however, as there is no responsible party to recover it from.
Medical payments or personal injury protection coverage pays for injuries an insured driver sustains in an accident. This coverage applies no matter who is driving or whose vehicle the insured is in; it also pays for injuries sustained while hit as a pedestrian or bicyclist. Certain states require all drivers to carry first-party medical coverage. It is optional in all other areas.
Additional coverage available on a policy includes uninsured motorist coverage, rental reimbursement and roadside assistance. These can be bought independently, so it’s possible to carry a policy with liability and uninsured motorist, for example, without carrying collision. Buying only the coverage that you need is the best way to ensure that you pay the best price for insurance.
How Car Insurance Cost is Calculated
Multiple factors contribute to the cost of auto insurance. A person’s driving history, age, marital status, credit score and geographic location all play a role in determining the cost of insurance. Different companies may rate these factors differently, leading to the difference in insurance costs between companies. Some insurers may also offer discounts that are not available through others.
The policy itself plays a large role in determining the cost of coverage. Policies with more coverage will cost more than those with less coverage; this means that a liability-only policy will cost less than a full-coverage policy. Additionally, policies with high deductibles cost less than those with low deductibles. This means that a driver can save money on full-coverage auto insurance by raising their deductible.
When comparing insurance companies, it’s important to compare identical policies. This ensures that the policies are sufficient and that the savings are genuine; otherwise, an insured may mistakenly purchase insurance based on price only to realize that the quoted price is not for he policy he or she needs.
How to Choose an Auto Insurance Company
There are multiple factors involved in choosing the best insurance company. Many factors are subjective; what makes a company appealing to one person may be a turn-off for someone else. Once you know how much coverage you need to buy, you can shop for a company that will give you the best deal on that coverage. Aside from price, there are a few other factors to consider when shopping for insurance:
— Do you want an agent?
Some insurance companies sell policies directly to the consumer through websites or toll-free numbers, both other companies utilize the service of agencies to sell policies and answer questions. For people who like having a personal relationship with their insurance company, an agent is a definite bonus. Not all companies have agencies, but it’s becoming common for most companies to offer options for both. Bear in mind, however, that companies with agents are often more expensive than those without.
— Do you qualify for special programs?
Some companies, like USAA, cater specifically to insureds who are in the military. Other companies may provide special discounts to government employees or other types of professionals. In other cases, you may need to choose a high-risk insurance company that will provide affordable rates despite your poor driving history or bad credit.
— Do you like the customer service?
If you have an agent, do you like the agent? If you’re using the toll-free phone number, is it easy to navigate? Can you understand the representative? Some companies outsource their customer service departments to other countries, which can be frustrating for some customers. It’s important to choose a company where you feel comfortable asking questions or making changes to the policy.
— Do they offer other services?
Most insurance companies offer a discount to insureds who carry multiple types of policy, so it might be worthwhile to purchase homeowner’s, renter’s or life insurance from the company in order to get the best rates on all policies.
When buying auto insurance, be sure to ask any questions you may have about coverage and pricing. Also ask if there are any discounts you might qualify for or if the representative has any suggestions about saving money on insurance. At the end of the day, the best company is one that you are satisfied with and that provides affordable insurance to suit your needs. No matter what company you choose, by doing some research in advance you’ll know you’re getting the best deal.