Before you purchase an auto insurance policy for your new or newly acquired car there are some things you really need to give serious consideration to before you even begin to interview companies and agents to purchase your car insurance policy from.
Probably the most important factor in getting the right and most cost effective policy for your automobile is to examine what you can afford and what you will need to adequately insure your vehicle for your usage needs. Take a good, hard look at how much you’ll be using your car; what you’ll be using it for (business, pleasure, travel, local shopping, errands etc.) this will help you determine what some of your risk factors may be and how much protection and coverage you’ll require to be adequately insured.
How To Make Sure Your Coverage Will Meet All Your Needs
Ask Yourself The Following Questions:
- How important to you is this car? If it is a classic, antique, or holds some significant monetary or sentimental value then you’ll want your insurance policy to provide the maximum amount of protection so that it can be professionally restored or replaced. This would require full coverage on your vehicle which includes comprehensive and collision, as well as coverage for the windshield, back and side windows. If the car is an old clunker and just gets you back and forth to where you need to go then you likely will only want to insure the car for what the law in your state requires you to have, in most states this is called liability insurance.
- How Often Do You Use Your Car And For What Purposes? It’s also very important to consider how much you’ll actually be using your car and for what purposes. Some insurance companies offer mileage based auto insurance plans, this type of policy is based on how many miles you drive each year. So if you don’t do much driving, this type of policy may be the best choice to save you money on the cost of your monthly premiums.
- Will You Be Required To Use Your Vehicle For Work? If your job requires you to use your car for more than just getting back and forth to work, such as running work related errands, trips to the bank, or other miscellaneous tasks for your employer you’ll need to purchase commercial auto insurance to be adequately covered. The same is true if your job requires you to use your car to perform a service, this would include; driving for a courier service, pizza/food delivery, transporting passengers for any purpose for a fee or per mile charge, or if you use your car for any other commercial purposes.
- Does What Kind Of Car You Drive Matter? Yes it does, very much so. Insurance companies compile information on all the various makes and models of cars and use this information to determine the cost of insuring them. Insurers utilize the statistical information to determine which models are more or less prone to incur claims. For example sports car models with turbo or powerfully charged engines are more likely to be stolen or be involved in an accident than say the family van or four-door sedan, your cost of insurance will reflect that. But the compiling of this information can also work to your benefit. Cars with safety features such as front and side airbags, anti-theft alarms, or a history of a good safety record are just some of the positive information that can lower the cost of insuring your car.
- Does Where I Live And Park Affect My Insurance Rates? Where you live and park your vehicle will definitely affect what you pay for insurance. In example, if you live in the suburbs and your car is kept in the garage it not only will cost you less to insure, but may also be a contributing factor in how much coverage you purchase. On the other hand, if you live in an urban area and park your car on the street, where your vehicle is more at risk of being stolen or vandalized, your insurance rates will be higher. People living in higher risk areas may want to consider purchasing comprehensive or increased comprehensive coverage to adequately meet their insurance needs.
- Who Will Be Driving The Car (besides you)? For the most part your car insurance will cover other occasional drivers of your vehicle, provided they are a legally licensed driver. But, if you will be allowing other drivers who live in your home to drive your car, you should add them to your insurance policy as additional drivers in order to be covered by your insurance if there should be cause (theft, damage, or accident) to file a claim.
- What Kind Of Insurance Should You Buy If You Finance Or Lease A Car? If you finance your car from a bank or credit union they typically require you to have full coverage (comprehensive & collision) on the vehicle, meaning your insurance policy will cover the full replacement value of your car. If you are leasing the car, the insurance company may require you to purchase full coverage and a supplemental insurance policy that covers any gap in what you still owe on the lease and the car’s current value. This is called gap insurance, and it will pick up the balance of what the full coverage value is and any remaining balance you still owe the finance company.
- What Does Your State Require To Be Legally Insured? Almost every state in the U.S. requires that you have at least minimum liability coverage on your car, find out what your state requires to be on the road legally. Though the state only requires you have minimum amounts of liability insurance, keep in mind that if you are involved in a serious accident you can be sued for large amounts of money in the event of serious injury or death.
There are many cost factors that come into play when it comes to car insurance that you’ve got little or no control over, additional factors such as your driving record, age, sex and credit record will all play a part in determining what your insurance will cost too. Fully examining your insurance needs and priorities enables you to make an informed decision on what type of coverage you need and that financially makes dollars and sense for you.
Some of these cost factors you can do something about i.e. improving your credit score, taking a defensive driving course, or adding anti-theft devices to your vehicle are all factors you can control to help reduce your insurance costs. Carefully weighing the cost verses risks will help you decide what type insurance policy you should choose to adequately provide the coverage that will meet your insurance needs.