Auto Insurance - A Reality And A Necessity

For virtually everyone who drives, automobile insurance is both a reality and a necessity. In some if not most states, it is mandatory unless you post a huge financial bond instead, or you can face huge fines and penalties if you have an accident. Many states will not let you obtain or renew a driver's license without proof of insurance, and a car loan requires pretty rigorous coverage to be approved.

Auto insurance offsets the costs of repairing or replacing a car damaged or destroyed in an accident, fire, flood or other incident, or lost or damaged by a car break-in or theft. Collision coverage protects you when you are at fault, and uninsured driver coverage pays when you are not at fault but the other driver is not covered and liability pays for damage done to another vehicle. Medical and other benefits are also covered. States may only require liability insurance, but loan providers will usually require full coverage.

Policies will have a deductible and the lower the deductible, the higher the premiums. Premiums are adjusted by your driving record, how long you have driven, residence, age, and the type and value of the vehicle. Rates for the same driver can vary by many dollars from company to company, so comparing rates by getting quotes is a no-brainer. You can't compare rates reasonably unless you know what is offered by each one so you don't compare apples to oranges. Make sure the obvious coverage is equal, and don't forget to check for perks and hidden benefits offered. Also check with fraternal and other organizations such as AARP that offer special rates to members. Membership is $12.50 a year but could save hundreds. Paying one annual premium may offer a discount over monthly premiums.

Where you live can make a surprising difference in auto insurance premiums, so when you are moving to a new area, check to see which zip codes have higher or lower premiums and take it into consideration when choosing where to live. Certain other factors can lower premiums: good grades, nonsmokers, defensive driving, and safe driver discounts. The kind of car you drive can also raise or lower auto insurance premiums. Expensive or high performance cars cost more. Even the frequency a vehicle is stolen can affect insurances costs. Ask an agent about the many factors to consider before purchasing.

Finally, get as many quotes as you can after deciding on the type of coverage you want and need from independent agents or web searches for quotes. Never assume the "good" rate you have now is the best you can do. Check the health of companies offering lower rates carefully and make sure the benefits are really equivalent. If your favored carrier can't meet the lowest quote, ask if they can increase some of the benefits, like towing, windshield damage or wage coverage. Getting quotes is the only way to get the best deal and the best coverage.

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