Car Insurance Buying Guide
Driving is an easily overlooked part of life for anyone who commutes to work each day or who uses an automobile for job or simply for pleasure. But with driver errors, other vehicles on the road and the elements, every drive carries some risk. Car insurance can help you to moderate that risk and supply peace of mind around your family and your property.
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Function
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The primary purpose of car insurance is to provide financial restitution for damage an insured driver causes or falls victim to. Insurance pays for repair or replacement of your vehicle up to the limits noted in your policy. Each policy also has a deductible, which is the amount you must pay before the insurance company will contribute. Most insurance companies offer auto insurance at monthly, semi-annual or annual premiums and require policyholders to renew the insurance each year.
Types
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When you buy an insurance policy, you can select what types of insurance you want to carry. Comprehensive insurance pays for damage to your vehicle from events such as theft, fire and vandalism. Collision is additional coverage that will pay for damage to your car in an accident you cause. Liability insurance pays for injuries and damage to other drivers, vehicles and property. You also can add specialized coverage such as glass coverage, rental car insurance and custom equipment coverage to pay for modifications you've invested in for your car.
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Changes
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The car insurance rates that insurers quote you represent what you must pay at that point in time. However, insurance rates can change based on several factors. If you have an accident or make a claim, your rates may go up. Depending on your insurer's policies, you may be able to lower your rates by taking a safe driving class, buying a car with additional safety features or remaining a customer for a number of years without having an accident. Compare rates and the policies regarding rate changes from several insurance companies before choosing a company.
Considerations
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Each state mandates what types of auto insurance its drivers must carry. Before buying car insurance, make sure you understand your state's requirements, including which types of insurance you need and how high your insurance limits must be. In addition, if you finance or lease a car, the lender or dealer may require you to hold additional insurance, such as collision coverage. This protects the lender's investment in the vehicle and ensures that you have adequate coverage for yourself.
Warning
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Despite state laws that require all drivers to have auto insurance, not all drivers on the roads are properly insured. You can buy uninsured motorist coverage to pay for damage that an uninsured or underinsured driver causes to your vehicle. This type of additional car insurance will also pay your medical bills if you need care following an accident an uninsured driver causes.
No matter how much car insurance you buy, driving recklessly is still unsafe. In fact, if you have a history of accidents, moving violations or alcohol charges, insurers can reject your application for coverage or refuse to renew your policy.
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