There are many factors to consider when shopping for an auto insurance policy, as far as coverage amounts and other pertinent details. What makes car insurance unique, compared to a health or life insurance policy, is that you’re not just obtaining coverage for yourself, or in some cases your family. With auto insurance you need to account for liability, which means potentially paying for injury or property damage sustained by you or others in an accident.
Of course, similar to any type of insurance policy, the goal should always be securing the lowest rate possible for the coverage you require. Still, it’s important to be conscious of all the variables that go into a policy, based on your personal details, the area you live in, and more.
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Without further ado, here is a simple list of what you should be aware of when searching for an auto insurance policy.
Type of Coverage
As mentioned above, auto insurance can cover multiple parties involved in an accident. The two main types of coverage to be aware of are: collision insurance and liability insurance. With collision insurance, you receive coverage for damage to your vehicle up to its estimated value (i.e., blue book value), while liability insurance covers claims filed by others if you’re found at fault for an accident, whether it’s bodily injury or vehicle damage.
There are additional types of coverage, which could depend on where you live and the requirements set forth. Uninsured/underinsured motorist coverage is available for an accident in which the other driver either has no insurance or not enough insurance. Meanwhile, comprehensive insurance covers non-collision related claims, including vehicle theft, vandalism, fire, and weather-related damages. Finally, Personal Injury Protection (PIP) covers your own (and potentially your passengers’) medical expenses, and can even cover lost wages.
The type of coverage you choose often depends heavily on the requirements of the state you live in. For starters, two states (Virginia and New Hampshire) do not require drivers to have auto insurance, but there are caveats in place. While Virginia doesn’t require the bare minimum of liability insurance, drivers still need to pay an annual uninsured motorist fee if they forgo a policy. And in New Hampshire, drivers who are found responsible for an accident are liable for covering damages, leaving those uninsured in a very vulnerable state.
Virginia and New Hampshire, along with 36 other states, are considered tort (i.e., “at fault”) states, meaning whoever is responsible for an accident is on the hook for damages. The 12 remaining states are considered no-fault states, meaning regardless of who is at fault, a driver is responsible for all or part of the damages they have incurred. As a result, drivers in no-fault states are often required to carry PIP as part of their auto policy.
Just be aware that these classifications are not black and white, and can differ from state to state based on factors like percentage of liability (in at-fault states) and specific minimum policy requirements. As a result, it’s important to become familiar with your state’s unique insurance laws.
Once you’ve become familiar with the types of policies available and how they apply to the state you live in, the next step is assessing yourself. You will need to provide basic information when applying for insurance (e.g., address, vehicle registration, license number, mileage), and those details can play a big part in determining if you are eligible for coverage and what rate you receive.
For example, the specific area you live in will have an effect on your rate, as drivers who inhabit cities are likely to pay more than those in rural and suburban neighborhoods. The type of car you own will also be a factor, since more expensive vehicles (e.g., luxury and sport cars) also come with increased rates. And finally, your own driving history will be put under the microscope. A bad driving record can have a negative impact on your rate, so it’s important to clear up any unpaid tickets for moving violations and reduce any points on your license before applying, to maximize your options.
While life insurance may seem complicated and driven more by negative factors than positive ones, there is still the benefit of policy discounts, which come in many forms. Discounts vary from carrier to carrier, but typically a good to great driving record could go a long way in reducing your rate. A vehicle’s attributes can also result in a discount, whether the car has certain safety and security equipment, or if it’s a green car that’s better for the environment. In addition, certain occupations, professional/school affiliations, and other qualifiers can lead to policy discounts.
As the above illustrates, there’s a lot more that goes into shopping for auto insurance than getting the best rate. However, all of these factors combine to create a more informed shopper, which helps in picking a policy that meets all the necessary requirements as well your own individual needs. With Fiona in partnership with Jerry, consumers looking for auto insurance can compare policy quotes from top providers, to find the policy that checks every box.
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