Cheap or Best: Which Auto Insurance is Right For You

Have you ever been in a car accident? If not, do you know someone who has been in one? If you answered yes to either of these questions, then you know how important car insurance is. The right car insurance can save you from financial ruin.

Whether you are shopping for the cheapest car insurance or the best car insurance, there are things you need to consider. These factors will help you get the right insurance for you.

So, where do we start? First and foremost, you need to shop around and get some quotes. You can get an insurance agent or an insurance broker to help you with this part. If your budget is tight, you will need to shop for cheap car insurance. However, cheap does not have to be bad. Ask your insurance agent or broker to get you the best car insurance for you. Ensure that you get at least three quotes so that you can compare them.

Coverage

This is a huge factor. You need to understand that insurance companies will charge you more depending on your coverage. The more coverage on your policy, the higher your premiums. The reason for these higher premiums is that the insurance company will have to make a higher payout in case of a claim.

Know what kind of coverage you want. First, understand each one and what it can do for you. Then you can choose several to make up the auto insurance policy for you. For example, you need comprehensive and collision coverage. Comprehensive does not cover collisions, but it covers fire, hail, floods, vandalism damage, among others. Collision covers a collision with another car and damage from guardrails, deer, or objects where you are at fault. It also covers damage from potholes.

Budget

Choose an insurance price according to your pocket, but do not compromise on getting a good policy. Remember that it is always a good idea to have a little more coverage than not enough. Having adequate coverage will also help you to protect your assets in case of an accident and save you money in the long run.

Vehicle

Insurance companies use the type of car you have in creating a quote for you. They will consider its age, make, model, body type, engine size, the likelihood of car theft, and the cost of repairs.

The most expensive vehicles are not necessarily the ones that cost more to insure. For example, you may find that an expensive SUV has better claim rates than a more affordable car. That is why it is important to figure out what it will cost to insure different makes and models of cars when buying a new one.

Another factor to consider with your vehicle is whether you use it for business. If you do, you may need to discuss that with the insurance company before you get into an accident and end up paying out of pocket. Most insurance companies do not give personal insurance for cars used for business.

How Much You Drive

This depends on how much you travel by car or the mileage incurred every year. It has a major bearing, especially in California. Drivers who travel fewer miles have lower premiums than those who do.

Age

Data shows that teen drivers are the most reckless drivers. They are also very likely to cause accidents. This makes them the riskiest and most costly drivers to insure. Therefore, the highest insurance premiums are those of teen drivers. If you compare this to the premiums paid by 50-year-olds, the difference is over $5,000 per year. This makes your age a very significant factor when shopping for insurance.

Also, among the teen drivers’ group, a young male will pay more than a female. This is because data shows that young men are more likely to get into accidents. Age starts to become less of an issue at 25 years of age.

Drivers in their mid-50s have the lowest premiums, after which the rates begin to climb and become high again for drivers in their 70s and above.

Driving Record

Insurance companies use this factor to predict how you are likely to act in the future. If you have speeding tickets, DUIs, or reckless driving charges, these will impact your premiums. You, therefore, have to look for insurance companies that are ready to cover you at rates you can afford.

Driving Experience

If you have years of driving experience, you can also use this as a factor when rating the insurance that is right for you. Insurance companies view drivers with years of experience as being less reckless or likely to cause accidents.

Credit Rating

Insurance industry data shows that drivers with poor credit file more claims than those with better credit. It is also likely they will cause more expensive damage in an accident.

The difference in the rates given to poor credit drivers compared to those given to better credit drivers accrues to over $1,200 annually. Come consumer advocates want this practice outlawed since they believe it is unfair and penalizes low-income car owners, but at least for now, it’s a practice that you may have to contend with when choosing car insurance.

Location

This functions on two levels: state and zip code. The state regulates car insurance. It is therefore subject to a state’s laws and regulations. For example, car insurance in Michigan is more expensive than in Ohio, which is only one state over. This is because Michigan is a no-fault state that legally requires drivers to have unlimited Personal Injury Protection (PIP) coverage.

The costs of unlimited and PIP coverage are therefore passed to insurers. This means that premiums in states like Michigan are higher. If you want the cheapest insurance, make sure to shop around for one in your area or region. Otherwise, other insurance companies may make you pay larger premiums that you could have avoided.

Your zip code also makes a difference. If you live in urban areas, insurance companies consider these to have higher crime rates than rural areas. Rural areas have less traffic and less risk of car theft. Therefore, your insurance premiums will be higher if you live in an urban area.

Ownership Status

Premiums will vary with the ownership status of your car. There are three categories of ownership: financed, leased, or owned. If you have a financed or leased car, you may also be required to factor in comprehensive and collision coverage.

Discounts

Depending on the insurance company, you may be able to get a discount. There are many different reasons for discounts. For example, if you’re a teenage driver with good grades, you can also earn yourself a discount. Below are some of the other discounts usually offered. Make sure to ask about these as you shop for the right insurance for you.

• Bundling policy discount
• Anti-theft device discounts
• Good driver discount
• Good student discount
• Affinity discount
• Low mileage discount
• Green vehicle discount
• Multi-vehicle discount
• E-pay discount
• Military discount

Other Factors

These include:

• Marital status
• Education
• Occupation
• Home Ownership

These may seem like they should have nothing to do with insurance, but they will influence your policy. In some cases, they may make the premiums higher, while in other cases they may earn you discounts. As you shop, consider these factors.

Brand Reputation

This is a big factor, but not one that the insurance company has to worry about—it’s one you should look out for instead. Rates will vary substantially from company to company because of this. You need to assess wisely whether you are paying for a brand name or the actual services offered. You may be paying too much for your car insurance simply because you have chosen a company that has premium prices due to its brand.

Even as you try to get cheap car insurance, ensure that it is among the best. Also, remember that the best car insurance may not be cheap.