How Little Do YOU Know about Auto Insurance?

Don’t you ever feel overwhelmed with all the information floating around about auto insurance? There’s just so much information and you can never be sure of what to believe or who to trust. So when you really think about it, how LITTLE do you know about auto insurance? Let’s find out.

Did you know your premiums could increase even if you were involved in a no-fault accident?

That’s right. You don’t necessarily have to be involved in an at-fault accident for your premium rates to increase. There have been cases where premium rates have been increased in spite of the driver not being at fault. There are always chances of your premiums increasing, even it’s not your fault, as your insurance company deems fit.

Several factors affect your premiums. The color of your car is NOT one of them

Car insurance companies decide your premium taking many factors into consideration; age, marital status, where you live, credit score, driving history etc. However, if you’re ever charged a high premium based on the color of your car, you should walk away immediately. This myth comes from the mistaken belief that people choose the color of their car based on their personalities. So for example, someone who likes the thrill of driving fast will probably buy a bright red car. Rest easy knowing this is just a myth. Buy any color of your choice!

Your insurance pays for damages even if someone else was driving you car at the time of an accident

People wonder why their insurance has to pay for fixing damages to their vehicle when someone ELSE was driving their car at the time of an accident. Well, it’s pretty simple. Your insurance covers your vehicle. So irrespective of who was driving it at the time of the accident, YOUR insurance will have to pay for the damages. Not the insurance of the person who was driving your car.

Comprehensive coverage is NOT full coverage

Comprehensive coverage pays for damages to your vehicle caused by fire, theft, riot, hail, storm etc. What your policy covers depends on the kind of coverage you choose. Customize your policy to suit your needs, taking factors such as: the age, build, model and make of your car, whether you live in an area prone to natural disasters, whether or not you have safety and anti-theft devices installed on your car, etc into consideration.

Bundling your home and auto insurance could save you a lot of money

It’s always a good idea to bundle your auto and home insurance. Insurance companies offer discounts to the customers who buy multiple policies from them. So if you’re looking to insure your home as well as your car, or if you’re looking to insure more than 1 car, find out about the discounts offered by the company for such purposes. Discounts to enquire about are:

  • Multi-car discount
  • Discount for bundling home and auto insurance
  • Good student discount
  • Defensive driver discount
  • Low mileage discount
  • Discounts offered for installing anti-theft and security devices to your car

It pays to stay on top of things when it comes to insurance. Read, enquire, verify, evaluate. Best way to stay sharp about auto insurance.

Elvis Donnelly is voracious reader and always looks out for happening topics related to personal finance. He specializes on subjects related to car insurance and uses her spare time to write on topics related to classic auto insurance and auto insurance.

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at MirandaMarquit.com and in her book Confessions of a Professional Blogger.

2 Responses to How Little Do YOU Know about Auto Insurance?

  1. Each carrier uses different underwriting criteria to determine premium rates. They all handle accident frequency, recency, and monetary value differently.

    This explains some of the advertising you see: the average driver switching to brand X saved Y dollars. The insurers are just pricing the same risks differently.

    Many auto insurance carriers now base premiums partially on your credit score. You can shop for coverage accordingly.

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