People assume that they are fairly well-informed about car and auto insurance. They pay their premiums on-time, they have coverage limits that are appropriate for their needs, and they know how to file a claim. Many people are surprised to find out that there are many details that can affect their coverages and the rates they pay.
Intrigued? We’ll be sharing seven interesting facts about car insurance. These details caught many consumers off guard.
#1 – Your rates will be affected by the type of vehicle you drive
Many consumers are not clear on this area. It doesn’t matter what colour your car is. A fin on the back is not an option. It is important to know the safety records and claims associated with particular makes, models, and years.
Your rates will be higher if insurance companies have made a lot of claims against policyholders who own the same vehicle as you. It is also true that the opposite is true. Insurers will pay less for cars that have fewer claims and have a good safety record (other factors being equal).
#2 – Coverage could be a waste of money
Some coverages must be purchased, while others can be purchased at your discretion. Comprehensive and collision coverages are included in the latter. Both are recommended for newer vehicles as extensive theft damage and loss can lead to substantial repair or replacement costs. However, comprehensive and collision are more expensive for older vehicles. These coverages are likely to cost more than the benefits they provide.
Consider dropping both your auto insurance and car insurance if your car’s market value is low. You will also see a drop in your auto insurance rates.
#3 – An increase in your deductible lowers your premiums
This shouldn’t be surprising. Many people have deductibles that are too low and end up paying higher rates. It’s a smart idea to increase your deductibles to reduce your risk of an accident.
Important side note: Make sure to set aside money to pay your deductible in case you have to file a claim.
#4 – Late payments can cause your coverage to be cancelled
Your auto insurance company will not accept late payments. Many insurance companies will cancel your policy and eliminate your coverage. It can be difficult to secure coverage elsewhere, as other companies may view cancellation differently.
Your insurer may offer to reinstate coverage if your policy is cancelled due to late payments. You may be required to pay your annual premiums upfront. It is better to pay your annual premiums on time.
#5 – Insurers often pay less for new vehicles
Many people are surprised by this, but it makes sense when you think about the factors that go into calculating someone’s rates. These factors include the vehicle’s security features, the driver’s age, and their driving records.
First, older cars are more often driven by younger drivers, who tend to have a less extensive driving record than their older counterparts. This is why younger drivers tend to pay higher premiums. A second reason is that these vehicles are often lacking high-end security features, increasing the chance of theft. They are cheaper to replace but don’t assume lower rates by default.
#6 – Your Assets may be at Risk
Auto insurance may make you believe that your home and financial assets are safe. Have you checked your policy recently to ensure this? What happens if your accident causes serious property damage or injuries? You’ll be responsible if the costs exceed your coverage limits. Consider your financial situation when reviewing your policy.
#7 – Rates vary dramatically from company to company
For identical coverages and deductibles, the rates offered by one insurer might be significantly lower than those offered by another. Many people assume that premiums are the exact same at all insurance companies. This surprise is surprising. They can vary. Comparing quotes from different insurers will help you determine if your rates are the best.
Auto insurance is probably the most boring product you can buy. It’s worth taking a moment to learn about your policy, rates, and coverages.
