What Should Every Driver Know About Car Insurance?
The first thing that a driver in the United States needs to know about car insurance is that if the person wants to drive, he needs to make sure he has it. Although there is no federal law mandating that drivers be covered by an insurance policy, each state has its own set of requirements about what insurance a driver with a car registered within state lines needs to purchase. However, this is not all a driver should know.
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State Minimums
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Before a person drives his car, he should make sure he knows precisely what kind of policy his state requires. States will divide mandatory coverage into three categories, all of which fall under the heading of liability insurance, although the amounts of cover required vary widely A person must be insured against damage he causes to another person's property, to another person's body and to injuries to multiple parties at the same time.
Liability vs. Full
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A driver should also attempt to determine whether he wants to buy just liability insurance -- and how much -- or if he wants to invest in comprehensive coverage. While liability coverage covers only damage to other people's bodies and vehicles, comprehensive coverage provides coverage to the driver himself for damage to his property. The drawback to comprehensive coverage is expense; the more coverage a person gets, the more it costs. However, most policies are customizable, allowing people to get coverage for only the contingencies they want insured.
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Premiums vs. Deductibles
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When a person selects coverage, one of the decisions he will have to make will be whether he wants to pay higher premiums or higher deductibles on his policies. If a person pays higher premiums, he will have to pay more to be covered. However, if he files a claim, his deductible on the claim will be less. By contrast, a person who selects higher deductibles will be allowed to pay less in coverage.
Factors that Influence Premiums
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The precise cost of premiums for drivers will vary depending on a number of factors, which a driver should know before buying insurance. Although exactly how companies weigh these factors will vary, most companies look at a driver's driving record; the kind of car he is driving; the area in which he drives it; and, in some cases, the driver's credit rating. All of these factors are linked to a driver's statistical risk of taking out a claim; drivers with a higher risk must pay higher premiums.
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