Need an Auto Insurance Policy? Here Are 7 Things You Need to Know
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Auto insurance policies are a necessary cost when you acquire a new vehicle. They provide you coverage in the event of an accident, car theft, damage, or other cost-incurring incidents for your car. As the policyholder, you’ll pay a premium in exchange for your insurance company’s coverage or mitigating the costs of an unforeseen incident involving your vehicle.
The price you pay for your auto insurance premiums is determined by various factors, including your driving history, the type and age of your car, where you live, and other things that may impact your favorability for an excellent rate. Regardless, there are ways you can determine the right policy for your needs, and it involves considering several factors before you sign away on your new auto insurance policy.
So, without further ado, here are seven things to know before choosing an auto insurer:
1. The Different Types of Auto Coverage
Collision Coverage
Collision coverage is essential to include in your policy, and frequently, it’s required for new cars. Auto collision coverage will cover your repair costs if you get into an accident. Should the repair costs outweigh your vehicle’s total value; however, your insurance company will write you a check for that amount so you can offset your costs.
Bodily Injury Liability
Bodily Injury Liability allows you to have higher policy limits, giving you better coverage. This type of coverage pays for injuries to the affected party if you are responsible for an accident. However, bodily Injury Liability is all-encompassing and offers coverage for medical-related expenses like ER and ambulance costs, funeral costs, income loss, and more.
Comprehensive Coverage
Comprehensive coverage is typically optional but protects your car from weather-related damage like hail or flooding and things like fire, vandalism or theft, damage from animals, and more. Like collision costs, this type of coverage gives you a full payout equivalent to the total value of your car if it’s damaged beyond repair.
Uninsured/Underinsured Property Damage
Uninsured drivers can pose a massive financial hurdle when obtaining coverage for your accident. With this type of coverage, your insurance company pays a portion of the damages if someone operating an uninsured vehicle causes an accident. As a result, you’re protected from the financial repercussions of the other party’s lack of coverage.
Gap Insurance
Should you total your car, Guaranteed Asset Protection or Gap insurance will cover the difference in value between your existing vehicle and the remaining amount left on your vehicle financing or lease. Often offered as an optional add-on for your policy, it works the same regardless of what has occurred to your vehicle. So whether you’ve experienced car theft or totaled your car in an accident, you’ll receive a payout for the remainder of your car payments. Gap insurance is typically required when you’re leasing a car.
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2. Insurance Rates Will Vary Across Providers
3. Never Let Your Policy Lapse
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4. Credit Scores Can Also Impact Insurance Premiums
Remember that unique formula that insurers use to determine your premium? Your credit score also factors into that equation, as it helps insurers predict insurance losses. In many cases, insurance companies have found that people with higher credit scores are less likely to get into accidents and thus cause insurance losses. So, the higher your credit score, the more likely to have a lower premium.
5. There are Ways to Lower Your Premium
Increasing your deductible: Your deductible, or out-of-pocket charge following an incident, can be raised to offset the cost of your premium. Bear in mind that you should always have savings set up for the unexpected, as deductibles can be costly.
Accident prevention courses: This is one of the most practical options if you seek to actively lower your premium. Many insurance companies offer discount policies in specific states for accident prevention courses, many of which take place online.
Check for low mileage discounts: For those who work from home or drive short, infrequent distances, you may qualify for discounts because you are on the road less often.
Keep a clean driving record: This one seems obvious, but insurance companies reward safe drivers with better premiums. Avoiding insurance risks like speeding and accidents will better position you for a reasonable insurance premium.
6. You'll Need These Essential Documents for Your Insurer
- Your driver's license & your license number
- Your Vehicle Identification Number (VIN)
- Copy of your current insurance policy (if it’s not a new vehicle)
- Mile estimates for all vehicles on the policy
- Estimates on what you're currently paying (if it’s already insured/not a new vehicle)
7. It’s a Bonus When an Insurance Provider Adds a Personal Touch
One example is Amica Mutual Insurance, an acclaimed insurance provider offering individuals and families various insurance services, including auto, home, and life insurance while providing best-in-class customer service and personalized coverage options. They are rated A+ by AM Best, first out of 50 J.D. Power awards, and boast a five-star rating on NerdWallet. Offering dividend policies that return up to 20% of its premiums, Amica focuses on helping its policyholders achieve long-term financial stability.
