About Car Insurance Rates

Car insurance is one of the most important types of insurance available. Getting an accurate rate depends on many factors, such as your age and driving experience. For the best quotes, it's always best to drive defensively and make sure you put safety first.

Purpose

Car insurance serves one purpose--to protect you and your investment in case of a devastating or minor car accident. Most states require drivers to have liability insurance or else license plates and drivers licenses will not be issued. Some states like New Hampshire do not require residents to have liability. Virginia gives motorists the option of paying the state $500 per vehicle if they choose to not purchase liability.

Types

There are several types of car insurance coverage. In most states, if you are still making payments on your vehicle, you are required to have full coverage, however, that rule varies from state to state. Car insurance comes in liability, full coverage, collision, comprehensive, uninsured/underinsured coverage, loss of use, loan/lease payoff or GAP and other services such as roadside assistance and personal property damage. Liability insurance covers bodily and property damage if the fault of the accident was caused by the insured driver. The insurance company pays for damage done to either the property or a person. Liability insurance is divided into two sections, combined single limit and split limit. Combined single limit covered both bodily and property damage under one policy. Split limit liability splits property and bodily damage into different sections but will only pay out a maximum payment per person and per accident. Full coverage is also known as comprehensive and collision. The collision part of the insurance covers the insured driver’s car after a deductible is paid. If you are financing a car, most companies will insist you carry collision until the car is paid off. The comprehensive part of car insurance covers an insured car that has damage due to theft, fire, vandalism or other types of damage. Uninsured/underinsured coverage or UM/UIM will provide you will care if the party at-fault does not have insurance or enough insurance to cover your damage. This type of insurance varies from state to state depending on laws. Loss of use car insurance is also known as rental car coverage. This provides the insured driver reimbursement for any rental expenses accrued because of a damaged car being repaired. Loan/lease payoff or GAP insurance was established in the early 1980s due to the popularity of leasing a vehicle. Because vehicles lose value once driven off the lot, many times the loan for the vehicle is more then what the car is worth. If an accident occurs, the vehicle is totaled and the owner still owes thousands of dollars, GAP insurance covers the difference.

Factors

Car insurance rates are based on many different factors. You may get a quote that is quite different than someone else the same age as you. The contributing factors that go into car insurance rates are age, gender, experience, marital status, type of car and distance. According to statistics, men drive more miles and tend to have more accidents then women do because of this. Most insurance agencies are moving from this ideology and issuing insurance in a unisex manner. Because good driving comes with experience, teenage drivers usually have to pay a higher premium. However, many insurance companies offer discounts to teens if they take more driver training courses and some companies will offer good grade discounts as well. Usually, most insurance rates will decrease after the age of 25 and seniors can get retirement discounts as they tend to drive a lower amount of miles. Unmarried drivers tend to pay higher premiums then married drivers; this could be because if you have two people on the insurance you can get a price break. The type of vehicle plays a significant role when it comes to car insurance rates. If you drive some sort of muscle or sports car, you are more likely to pay a higher premium then someone driving a compact of luxury car. The distance and how often you drive your car is increasingly becoming the most popular discount when it comes to rates. Some insurance companies will give you huge discounts if you only drive your car short distances. Companies like Progressive have GPS or OBDII systems that can track where and how you drive your car and will charge you accordingly. Progressive also offers a "Pay as You Drive" and "Pay How You Drive" program in some states.

Time Frame

Most insurance companies will mail you a monthly statement. However, there are many instances where you can opt to pay for your car insurance every three months, six months or even lump sum at the beginning or end of the year. Just make sure you are current with your premiums because your insurance can lapse without you being aware and then you will not have coverage when you drive.

Warning

If you don't have insurance, beware. Car insurance is protection for you, your family, your personal belongings and the other driver. If you do not have insurance, you could face fines and charges that could leave you penniless. It pays to make small payments monthly and have peace of mind instead of just hope you never get into an accident.