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How to Get Cheap Car Insurance

How to Get Cheap Car Insurance

For many people, car insurance is a major expense category in the household budget. And because it’s against the law to drive without car insurance, it’s not a budget item that can be eliminated unless you’re willing to go car-free. That doesn’t mean, though, that you’re stuck paying sky-high rates. Here’s how to get cheap car insurance. 

Learn about personal loan rates. 

How Insurance Companies Set Car Insurance Rates

Like health insurance, car insurance comes with both premiums and deductibles. The premiums are what you pay the insurance company every month to maintain your coverage. The deductible is what you’ll pay when you start making claims, up to a certain annual cap of, say, $1,000.

It’s worth noting that most people who say they want cheap car insurance mean that they want car insurance with low monthly premiums. But, as with health insurance, there’s a risk to having a policy with low premiums and a high deductible. In the event of a serious accident, you’ll have to meet that deductible. So, one way to get lower premiums is to opt for a higher deductible, but this is only a safe strategy if you have enough liquidity to cover your deductible in the event of an accident.

When car insurance companies set insurance premium rates they take several factors into account. These include applicants’ age, gender and driving history, as well as the type of car the applicant drives and the driver’s state of residence. While you can’t change your age, there are other steps you can take to get favorable rates from car insurance companies.

Types of Coverage

How to Get Cheap Car Insurance

Insurance companies charge more for comprehensive car insurance than they do for basic coverage. In most states you’re required to have liability insurance to cover any damage you do to another car or driver. The extent of that coverage requirement varies by state. In most states, you’re not required to have insurance to cover damage to your own car, or injuries you might suffer in an accident.

If you choose to add insurance coverage for yourself, you can opt for comprehensive coverage or collision coverage. Collision coverage, as the name indicates, covers damage from an accident with another car or an object, and in the event that your car flips. Comprehensive coverage covers things like theft, vandalism and natural disasters, too.

So, while you’ll almost definitely need to buy liability coverage to cover other drivers’ damages, you might not need to buy physical damage coverage for your own vehicle. It will depend on the terms of your lease if you’re leasing a car, and on your own assessment of the risks you face.

If you’re buying a valuable new car, you’ll probably want comprehensive coverage. If you’re paying cash for an older, used vehicle, you can probably get away with a more basic level of coverage. Whatever insurance option you choose for yourself, be sure to comply with state laws relating to liability insurance for any damage you might do to another driver. Once you have a car insurance policy, carry proof of insurance with you in your vehicle at all times. 

How to Get Cheap Car Insurance Rates

How to Get Cheap Car Insurance

In the long term, one of the best ways to get cheap car insurance is to be a safe, responsible driver. The worst drivers have high rates because the insurance company needs financial compensation for the high likelihood that it will have to pay out in the event these drivers get in an accident. If you have a spotless driving record, keep it up. If you have some accidents or tickets in your past, they shouldn’t drive your rates up forever. If it’s been a few years since your last incident, you can try calling your insurance company and asking for a lower rate, using your recent, safe driving record as a bargaining chip.

Another way to get cheap car insurance is to use the same insurance company for more than one type of insurance and get a discount for your loyalty. For example, you can contact the insurance company that provides your homeowners insurance, life insurance or motorcycle insurance and ask if the company can give you a good deal on car insurance. If you have more than one car, you can bundle the insurance coverage on both vehicles.

Your credit score will also affect your car insurance rates, just like it affects the rates you’re offered when shopping for a mortgage. If your credit has improved since you last bought car insurance, you may be able to negotiate your way to cheaper car insurance. And if you pay your car insurance premiums and bills on time and in full, you’ll build up goodwill with your insurer and might qualify for promotional rates.

If you don’t drive very much during the year, you might get cheaper car insurance from a usage-based plan than you would from regular car insurance. Track your mileage before you start shopping for car insurance and see if your low mileage makes you eligible for a better deal.

If you’re under 25, you’ll pay higher premiums, all things being equal. That’s because insurance companies judge young drivers to be riskier drivers. You can get lower rates by joining your parents’ plan, or by using your good grades to get a discount on rates, if your insurance company offers that option. Once you reach your mid-20s there’s no reason to keep paying the high rates that insurance companies levy on young drivers. You can ask your insurance company to lower your rate, or shop around for insurance from another provider.

Finally, the type of car you drive can affect your car insurance rates. Big, powerful and flashy cars are more likely to trigger high car insurance rates because the insurance company assumes you’ll be more likely to speed in that kind of vehicle, and that the vehicle will be a target for theft. Vehicles with high repair costs (such as foreign-made cars) may be more expensive to cover, too. In some states, having a used car will mean lower rates because rates are affected by your car’s replacement value. But in other states, rates are based on vehicles’ safety features, so having an older car won’t necessarily help you get cheap car insurance. If your car has special safety and/or anti-theft features, you may qualify for cheaper car insurance on that basis.

Bottom Line

If you don’t have a vehicle or you’re thinking about getting a new (or used) car, it may be worth doing some research to find out which kinds of cars will get you the lowest car insurance rates. And if you’re paying a lot for car insurance now, you may be able to get cheaper coverage by negotiating your premiums or switching providers.

Photo credit: Â©iStock.com/andresr, Â©iStock.com/ipopba, Â©iStock.com/kate_sept2004

The post How to Get Cheap Car Insurance appeared first on SmartAsset Blog.

Source: smartasset.com

5 Things to Consider When Changing Car Insurance

Changing car insurance

Insurance is defined as a form of protection against loss. But in today’s insurance industry, insurance can be purchased to mitigate against all forms of loss. It is a type of risk management used by people to protect against uncertain loss or the risk of failure. Insurance companies or carriers or underwriters sell premiums to those who wish to purchase premiums. Premiums can be defined as the number of money carriers charge to customers in exchange for the coverage set in the agreement also known as the insurance policy.

And in 2017, the U.S. insurance industry sold premiums reaching a total of $1.2 trillion with the health insurances accounting for a large chunk of that amount. Coming in at second place was P/C (property/casualty) premiums accounting for $558.2 billion in 2017.

Some may argue that the reason for this is due to the hike in prices of premiums over the years, but the truth is for the millions of people who have experienced softer blows because of the payouts from insurance companies, paying a premium is a small price to pay.

There are currently several types of insurance policies. From health insurance to life insurance, automobile insurance and so on.

These days, choosing a new car insurance policy that works for you is usually time-consuming, expensive or even both. And because policies are not usually permanent, you can easily switch insurance providers if you are not happy with your current provider.

And for those who think they can afford to drive around during the period they are in between a comprehensive insurance policy, the bad news is that in all but a few states, an insurance policy is needed alongside a license in order to drive.

But the good news is changing your policy provider should not be so difficult, this article outlines five of the most important things to consider when shopping for a new insurance carrier:

  1. Cost:

Like every other thing on the market, the cost of an insurance policy is not equal. It is almost impossible to get the same coverage from 10 different companies at the same price. Odds are you would get the same coverage you are getting at a fraction of the same price from another company. This is because various companies factor in different things when putting together the price for their insurance policies. Some of these costs could include the cost of running the company, the cost of offering more benefits and other hidden charges.

It is essential to factor in elements other than your out-of-pocket expenses before you decide to make the switch between car insurance companies. You can also try to take control of the factors you can control like improving your driving record or looking at additional types of auto protection plans. All these are considered by the insurance company and could eventually save you money.

  1. Your Choice:

Another important reason why several bare minimum automobile insurance policies are cheap is that they offer limited options regarding maintenance and repairs. Like a health maintenance organization (HMO), car insurance companies can ask you to take your car for approval at one of their approved dealerships for appraisals. Sticking with a top-shelf insurance company could possibly mean higher premiums but it also means better care should you need it.

The better the insurance company, the higher the premiums you would have to pay.

  1. The Benefits:

Odds are, if you cannot list the distinguishable advantages offered to you by your insurance policy, you are not gaining a lot in return. An amazing advantage you could watch out for is the reduction of rates if you go a few months without any accidents and accident forgiveness. Some companies also choose to pay for your rental car if you need to leave your car at the mechanic regardless of how long it might take.

Other companies offer reduced rates for purchases of bulk policies. i.e. The purchase of car insurance with possibly fire insurance and so on. Instead of you letting your insurance company ask what you can do for them, ask what they can do for you.

  1. The Circumstances:

Sometimes things that we do not plan for happen and when such things happen, the first thing to be done is to start searching for a new car insurance policy. For example, most new cars often need complete coverage until they are fully bought, and some local insurance companies do not offer continued coverage if you change cities.

Also, rates could also go up if a new driver is added to the policy. This is, of course, dependent on the driver’s age, gender, and driving history. Understanding your unique situation will allow you to properly assess what is needed and what is a mere frivolity.

  1. Your Company:

Because of the internet, finding out pertinent information about a prospective insurance company is very easy. You can figure out everything there is to know about them. What kind of customer service do they offer their clients? Do their representatives listen? Do they treat their customers with respect?

Find out how the claim adjusters and representatives of the company treat those who work with the cars. Knowing these things is essential because a company that treats its employees terribly will possibly skim around the edges when it comes to their customers.

Also, try doing a bit of research into the company’s ethics. It is advisable to do business with a company that believes in the same things you do and do not engage in behavior that you find personally distasteful. Your money will be used to pay for several things to ensure they are all used for things that you support.

It’s an added bonus for you if you know who your insurance agent is, and you have a great relationship with them. Usually, these people are the ones who will go the extra distance for you should you need to file a claim and they can also help with the filing of the claims or give you a recommendation on local companies that could be of help to you.

Finally, you’ll want to check your credit score. Credit.com offers a free credit score updated every 14 days. Usually when getting a new insurance quote, insurance companies will run your credit. A higher credit score usually means a lower monthly premium, although other factors like your driving record and marital impact how much you’ll be paying. Remember to consider these five factors when considering a new insurance company.

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