Owning a car entails having to get insurance for your vehicle. This is to ensure safety for yourself should you be involved in an accident of any kind. Having car insurance entails paying a certain amount to the auto insurance company for a policy that will provide you with protection against financial losses in case the car is damaged in any way. Granted, there are a myriad of choices for companies offering insurance for your vehicle. It is therefore necessary to know the basics of getting car insurance for you to be able to make wise informed decisions.
Get started with qualifying basic facts about yourself – your age, gender, social status and your address. Younger drivers get higher premiums, or in other words, get to pay more for car insurance than older drivers. This is because younger drivers are seen to be more reckless and are more likely to get into accidents, thus obliging the insurance company to pay more on you. The area where you drive also matters.
Insurance premiums are more expensive if you live in an accident prone area. You get discounts, however, when you are a student – particularly students with high or above average grades. Being a woman also automatically entitles you to lower premiums since companies deem women to be more responsible drivers than men. Your past driving records would also speak for you. Having less road violations and accidents in the past will give the company assurance that you are less likely to incur any damages on your car.
Which insurance company and / or what auto insurance policy you apply for are your choices. The most basic type of car insurance is that which gives liability coverage. This type pays for damages done to other parties but does not pay for personal losses. Most states require this type of insurance. Collision coverage, as the name implies, covers repairs for damages acquired in collisions.
Another type of insurance gives comprehensive coverage. This type provides auto insurance coverage for damages caused by collisions and non-collision incidents such as theft, vandalism, or natural disasters. The best types to choose are, by far, collision and comprehensive coverages, especially if you depend on your car as your primary means of transportation. This is also essential when you have a number of accidents and violations to your name.
Carrying both coverages and not dropping one or the other is important for the reason that these types are strictly for their respective purposes only. This means that if you choose to drop comprehensive coverage, you should not expect your collision coverage to cover damages should your car be ruined in a fire. This ensures premium safety from financial losses should you meet any accidents or such.
It must be understood though that car insurance policy rates differ. Some are more expensive than others, usually depending on the company. Keep an eye open for discounts. As mentioned earlier, depending on factors such as age and gender, you may be granted lower premiums. Try searching the net for car insurance companies. You will find on their sites information on the services they offer and the cost they offer for their policies.
Tag Archives: Choosing - Page 2
Basic Things You Need to Know When Choosing Car Insurance
No Free Lunches While Choosing Car Insurance
In the cut-throat automobile market, it is not uncommon to hear a car dealer offering free insurance cover on the vehicle or charging as little as a rupee. While this may seem as an attractive proposition initially, you may have to feel the pinch later. Dealers offering car insurance for free or for a nominal amount at the time of purchase are not likely to offer you a good deal on renewal of the policy cover. Car dealers get a commission for selling a particular insurance company’s policy. Both small and big insurers have agreements with various car dealers for selling their motor insurance policies. While the big players in the motor insurance segment have been following this practice for long, small and mid-sized insurers are following suit only now. Once the car insurance policy is sold, the insurance firm passes on the commission cost, which it has to pay to the dealer, to the policyholders as a premium cost. Consequently, policyholders have to pay a higher amount than the normal premium when the time for policy renewal arrives. The normal premium for a car insurance policy depends on the location, the make of the vehicle, its age and claims history. At the time of renewal, car dealers load the commission cost they are to get from the insurer with the premium amount. As a result, policyholders do not get the full discount offered by the insurance company when they buy the policy from a dealer. Following detarrification in the general insurance segment, even the channel through which the policy is acquired is also making a difference. “The burden of the overriding commission cost goes to the customer. As this practice is followed by almost all general insurers with a motor insurance portfolio, customers must show more discretion before signing the dotted line. Moreover, it is important that they opt for a policy offered by a financially sound insurance firm with a good claims history”, says Sourav Acharya, Insurance Consultant, Bajaj Allianz General Insurance.
