Auto Insurance Facts You Should Know

Everyone wants a personal safe ride whenever they go out for a trip or even traveling near destinations. People are also after on the security of protecting their investment and physical health when an accident happens. Because of this, car insurance became a popular industry in the country. In fact, auto insurance became a necessity nowadays when you own a car. Having car insurance is a requirement for most states in the USA. This is already by law and it depicts the benefits it could provide to the policyholders.

Car insurance could indeed provide this security financially when we have to deal with damages due to an accident. But even there are many already people who have this, a lot of things are still not known by policyholders or by other people who are in a search about auto collision coverage premium. To help you with this, here are auto insurance facts you should know.

1. Factors In Determining Auto Insurance Rates

Below are different factors that are being used by insurance companies to determine the cost of your auto insurance.  

Age

Age in correlation with the years of driving experience affects the cost of car insurance. Younger drivers tend to have less experience which makes them more prone or have a higher risk to be involved in an accident. In between the ages of 25 to 30, auto insurance premiums became cheaper and usually became more expensive again for people within the age range of 60 and above.

Records of Driving

Accident involvement and traffic violations are some of the biggest contributing factors. People who have bad records will have to pay more expensive car insurance premiums.

Location

The policyholder’s location affects the cost of the premium. If the area of the policyholder is known for numerous accident cases and frequent insurance claims, the cost of car insurance is more expensive. The crime rate in the area is a factor as well that makes insurance costs higher than in other areas.

Car Model

Insurance companies are considering the year, model, and make of your car.  The specification of the car is a factor as well since there are car features that are expensive to repair or replace.

2. Car Insurance Companies Are After The Car, Not The Driver

Regardless of who drives the car, standard auto insurance policies follow it. It means that your insurance will still provide coverage for any damages to the car even you are not the driver. There are states that it is not required to have this kind of policy. People may choose the named driver policy which follows after the driver, not the car. This is the type of auto insurance that could only be extended to people who live in the same household as the policyholder. It also includes people that may be listed on the coverage. If you lend your car to someone who is not indicated in the list his or her insurance will be used in case of an accident and claiming damages.

3. What Are The Different Types Of Car Insurance Policy?

Medical Payments Coverage

Medical Payment Coverage is the insurance premium that will be beneficial to cover medical expenses due to an accident even you or the other party is at fault.

Uninsured Motorist Insurance

This covers the damages caused by people who don’t have insurance or accidents which the responsible person is unknown. An example of this case is hit-and-run.

Collision Coverage

If the policyholder is involved in an accident with another vehicle, the collision coverage assists in repairing or replacing your damaged car.

Comprehensive Policy

Comprehensive Policy provides more coverage in an event of an accident that involves another vehicle. Aside from car collisions, it covers vandalism, damages due to weather conditions, and accidents that involve animals.

Liability Coverage

This type of auto insurance is required in driving a car in most states in the country. In a case of an accident, it covers injuries and property damages for which the policyholder is responsible.

Rental Reimbursement Insurance

If the policyholder has to rent a car as a temporary substitute for the vehicle that has been damaged in an accident, the rental fees or expenses could be reimbursed. Rental Reimbursement Insurance covers the rental expenses for the insured car owner.

Underinsured Motorist Insurance

This type of premium is beneficial in an event that the other party’s insurance policy is not enough to cover the damages of the accident. Some policyholders choose minimum coverage of insurance to make it cheaper but only have limited coverage.

Personal Injury Protection Insurance

It provides wider coverage in dealing with medical expenses and the financial income loss due to an accident. It could include up to 80% of the medical expenses and other damages.

Classic Car Insurance

This insurance policy covers protection for classic and vintage cars. Car collectors and vintage enthusiasts are the people who benefit from this insurance coverage.

Gap Insurance

Cars’ value depreciates very fast as time goes by. This makes the cost of the settlement not be enough to cover all damages. If the car was purchased through a loan, Gap Insurance covers the amount owed by the policyholder if the vehicle is stolen, a totaled car or a total loss.

Towing And Labor Insurance

This insurance coverage could reimburse the cost of tow services and repair services of the car. This is available when the policyholder has a comprehensive coverage premium.

Comprehensive Policy

Comprehensive Policy provides more coverage in an event of an accident that involves another vehicle. Aside from car collisions, it covers vandalism, damages due to weather conditions, and accidents that involve animals.