Buying a car, especially for the first time, feels great — it’s such a fantastic achievement for every owner. While most people concentrate on the purchase price of the vehicle, owning one comes with other additional costs. These include auto loan repayments, gas cost, repairs, toll charges, and of course, auto assurance premiums.
That said, here are some of the things you need to know when planning to buy an assurance cover for your car.
1. Why Buy the Cover — Do You Really Need It?
Paying monthly premiums can feel like a huge burden for every car owner. And while you may want to ignore it, you can’t. Every car owner gets to pay about $500 to $3,000 every year as part of car insurance cost. Whether you buy the cover online or use an agent to acquire it, the process can sometimes be quite complex.
In fact, one of the main reasons why you must acquire this cover is to fulfil a legal obligation of the state you live in. Here are other reasons why you need an auto assurance cover.
• Every day you drive, you risk having an accident on the road, and the policy you take will help in covering the losses incurred.
• When an accident occurs, your cover will help to protect the car from devaluation.
• It comes with great peace of mind, whereby you relax knowing that everything is taken care of in case of an accident.
• The cover you took can safeguard you in a lawsuit whereby you caused damage to property while driving.
• Protects your car against theft — your assurance company will compensate you accordingly.
2. Different Factors Determine the Rate of Premiums You Pay
Now that you understand the necessity of having an assurance cover for your car, you need to know how much you will pay and why. Various companies apply different criteria to determine premium rates during the underwriting process. Some considerations include the type of driver you are, your gender, age, or type of car you are driving. Their main concern is the extent of risk involved with every consideration.
For instance, some companies will charge a high rate for a male driver than a female one on the basis that male drivers tend to be reckless on roads. Others may charge a higher rate to drivers with bad credit history. Some may deny you a cover if you have a terrible account of accidents and law violations. This means that two companies can evaluate one person and end up with varying conclusions.
3. Never Settle With the First Company
Like any other business, these companies will offer different services, and their prices will also differ. The best thing to do is shopping around to ensure you get the best deal — one that gives value for your money. If you start working with the first assurance company you get, you might end up paying high rates for no good reason. Do your research online, ask for referrals from friends or relatives, or walk from one company to another. Comparing your shortlisted companies will give you an affordable deal that suits your specific needs.
4. Waiting Until the Policy Expires Might Be Costly
Your assurance company might view you as irresponsible if you continue driving after the expiration of your auto coverage. The consequences of this act include charging you higher premiums. You are a risky driver and, therefore, should compensate for your recklessness. Therefore, before your policy lapses, you should renew it unless you are planning to discontinue the current company. However, you still need to buy the policy from the new company before the current one gets cancelled.
5. There Is a Difference Between Collision and Comprehensive Policies
When planning to buy coverage for your car, remember there are different types of policies you can go for — some are optional while others are compulsory. For instance, liability indemnity is a must since it covers loss of property or injuries suffered by a third party in an accident involving your car.
Comprehensive and collision policies are optional. So what is the difference between the two? Comprehensive policy covers theft and damages that occur in any other incident apart from a collision — for instance, floods, hail, fire, vandalism, or falling trees, among others. A collision policy, on the other hand, covers incidents of collision with another vehicle or any other item causing damage. It also covers damages caused by rolling your car or from potholes.
6. Deductibles Have an Impact on Premiums Rates
Most assurance companies will set policy prices based on the amount they expect to pay in case of an incident. Now, if you agree to raise your deductibles, it automatically means that you will cover a more substantial portion of damages when an accident occurs. Your assurance company will, therefore, agree to lower your premiums because you have reduced their burden. However, before you raise the deductibles, ensure that you have enough money to pay for them once you make a claim.
7. The Car You Drive Influences Policy Rates
While the most expensive doesn’t always come with high coverage rates, the type of the car plays a role in setting it. Some of the things they will consider are the cost of repairing, safety measures of the car, or the possibility of theft, among other things. If they determine that your vehicle is a low-risk or will not require a lot of cash to replace or repair, the premiums will be reasonably low. Therefore, keep these options in your mind when buying a new car.
They say that knowledge is power, and with this auto assurance information, you definitely have the power to get the most affordable and suitable policy. Remember, no matter what, you need at least one policy (liability coverage) for you to start driving as a responsible driver.