Choosing auto insurance can be a trying experience, but with ample knowledge and helpful guidance, you can make smart maneuvers that lead you to financial savings and great coverage. By having a good understanding of how the auto insurance process works, you can make the best decision for you and your family and feel good about it.
Read on for four important secrets, facts and auto insurance tips that every driver should know. (Note: this is Part 1 of 2. Our followup auto insurance blog post includes four more need-to-know facts.)
1. The Vehicle You Choose Affects Your Policy
Did you know that there is a rating system that insurance companies use for every make and model of car? Safety, theft and how much money you paid for the car can all play a role in how much your premium costs you. Vehicles without all the bells and whistles typically save you money when it comes to choosing an insurance policy. Providers also know which cars are most likely to be stolen, and they charge more to insure those models. It may make sense to think about insurance policies before you buy your next car. In fact, don’t be afraid to ask your insurance company about premiums for the different vehicles you’re considering purchasing.
2. Your Credit Matters
Good, bad or ugly – your credit may impact your auto insurance rates. Why? Providers have made a direct correlation between certain credit characteristics and the likelihood that you will file a claim. Variables include age, area of residence, type of car, driving record, claims history and other financial factors. Paying your bills on time shows the insurance company that you are stable and financially responsible. Needless to say, improving your credit has far-reaching benefits, and yes, you should know what your credit score is.
3. It Helps to Understand Insurance Terminology
If you want to talk car insurance, it makes sense to understand the language. Important terms to learn are: bodily injury liability, property damage liability, collision coverage, towing coverage, rental reimbursement, comprehensive coverage, medical coverage and uninsured/underinsured motorist. Take the time to learn the language and it could save you money and problems in the future.
4. Administrative Fees Lurk Behind Every Payment
Always ask your provider what its administrative fees are. Most auto insurance companies charge administrative fees to break up your payments into installments, or based on your chosen method of payment such as automatic bill pay or over-the-phone payments. Whether it be monthly or every three months, you risk increasing your total cost each time you break up your payments into installments. To avoid the added expense, consider paying your premium up front and in full.
Auto insurance is not just a commodity – it’s an important financial decision that could affect you for the rest of your life. You are protecting your financial health, and a smart buyer will research their options, ask questions, and consider getting more than just the minimum coverage required by law. If you need assistance understanding all there is to know about auto insurance, please ask our insurance experts. You can also request a quote for free here.
Read the remaining four things every driver should know about auto insurance (Part 2).
