Is car insurance confusing? We are not surprised. There are many options and decisions that you can make regarding your car insurance. This could cause confusion and conflict. We will try to help you understand some of these dilemmas.
1. Insurance vs. driving uninsured
You just bought your first car, have no job, and you are already weighed down by college debt. You don’t think insurance is a priority and are wondering if it’s worth the effort. What’s the worst thing that could happen? It’s quite a lot. Uninsured drivers could be fined a lot, have their license suspended, and have their car impounded. You could also be in serious trouble if your car is damaged by another vehicle. If you are found to be at fault, you will likely be responsible for any damage to your vehicle and yourself. You will also have to pay the cost of any property or personal injuries to the other person. This one is easy. No matter what, get car insurance.
2. Full Coverage vs. Minimum Liability
We’ve convinced your car insurance decision. Now let’s tackle the next question. How much? It may seem tempting to only get the minimum state coverage, but we recommend you get more. Your state may only require you to have a certain level of liability coverage. If that is the case, your insurance provider will not provide any support in the event you are injured by theft, acts of God or accidents with uninsured drivers. We recommend that you purchase collision, comprehensive, and Personal Injury Protection (PIP). Collision covers damage to your vehicle if you are involved in an accident with another person. Comprehensive includes theft, vandalism and fire as well as flood and flooding. Personal Injury Protection (PIP) will cover medical bills, and sometimes loss of wages, that may result from an accident.
3. High Deductible, Low Premiums vs. Low Deductible, High Premiums
It is easy. The answer is simple. A low deductible will result in higher insurance rates and vice versa. Increasing your deductible can lead to huge savings. Keep your deductible low and put it away. If you are in an accident, and file a claim, you will have to pay it.
4. Policy 6 months vs. policy 1 year
Most people buy 6 month policies. However, you can also purchase 3 and 12 month policies. A 12 month policy is best if you intend to keep your insurance coverage for the whole year. A 12 month policy gives you the assurance that your rates will not rise and you will remain insured for that time. A 6 month policy could result in a rise in premiums and, if there are any serious claims, the insurer might not renew you. You may not only get a lower stress level, but you might also receive a discount if you purchase a policy for the whole year.
5. Additional to the parents’ policy Vs. Separate Policy
Young drivers are more likely to have high insurance rates than their parents, so they often choose to add to their parents’ policies. This has its downsides. Your parents’ insurance records will also be affected if you file a claim or are convicted of a driving offense. There is no one solution to this problem. The best thing is to get an estimate from your parents and then compare it with auto insurance quotes free of charge and discounts offered by other reliable providers.
6. Cars for sale – Used Car vs. Cars for sale
To get the best car insurance rates, it is important to find the right balance when choosing your first car. A car that is old and in need of repairs will be more costly to insure. A shiny new sports car is less likely to be stolen and the drivers are more likely to drive faster, so you will pay higher rates if you purchase one. A second-hand car, which has been only driven for a few years and is in good condition with safety features, is the best choice.
7. Paying in full vs. paying in installments
Auto insurance companies offer the option to pay in installments. However, it is best to pay your premiums fully if you are able. This may result in discounts, but even if it doesn’t, you will save money on the extra money your provider would charge for you to pay in installments.
8. Switching providers vs. Staying with the same provider
This varies from one person to the next and provider to provider. Many auto insurance companies offer loyalty discounts to encourage you to stay. Others will give you a discount if your company switches to them. Sticking with a company can often result in a discount for good drivers, disappearing deductibles, forgiveness for first accidents, and other benefits. Other companies may offer you a lower rate. You can only find out if you should stay or change by going online and getting as many quotes as possible on auto insurance. Whatever decision you make, ensure that the company you choose is trustworthy.
9. How to file a claim vs. how to pay for damages
Premiums are paid to ensure that your vehicle/person is covered in the event of an accident. The unfortunate truth is that filing a claim could increase your premiums. You need to calculate the benefits and costs of an accident. After your deductible has been taken, consider how much repairs or replacements will cost. Your deductible is $500 and your car sustained $1000 in damage, then filing a claim may not be worth paying the provider for the additional premium hikes. If your car has been totaled and costs $30,000, you should file a claim.
10. Vs. Being honest with an insurance company
Insurance can be tricky. There are many situations where people might try to hide or fabricate facts. Let’s say you want to perform a hot performance modification. It’s possible for your insurance company to drop you or raise your rates if you inform them. You might also find yourself in a tight spot and need to rent. A quick way to make money is to claim compensation from your insurance company by staging an accident/theft. We have one word for you. Don’t do it! If you are caught, the company may drop you and your local police station will pay you a visit. You will also be fined/prisoned time and no auto insurance company is going to touch you again. If a provider agrees to take you on, we can assure you that your insurance premiums won’t bring you joy. Any company that offers to take you on is unlikely to be reliable. The fact that they are associated with people charged with insurance frauds only proves their inability to be honest and trustworthy.
It is difficult to understand auto insurance. This is unfortunate given the fact that everyone who drives a vehicle must deal with it. Knowledge is power and you can make informed decisions that will improve your security and your wallet.
