There are so many risks and liabilities associated with driving and owning a car. This is why car owners are required by law to have auto insurance.

What is Auto Insurance?

Auto insurance, also known as car insurance, motor insurance and vehicle insurance, is an agreement between an insured person or group and an insurance company. It is a type of insurance purchased for vehicles like cars and trucks. The primary purpose of an auto insurance is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

How Des Auto Insurance Work?

An auto insurance is a contract between an insured person or group and the insurance company. The insured person or group pays premiums, which is the amount of money charged for insurance coverage, to the insurance company. In return, the insurance company promises to pay compensation in the event of an accident or loss as define in the policy.

The insurance company issues the insured person or group a proof of insurance, which will be presented if the insured person or group gets involved in an accident or is stopped by law enforcement officials while driving. The proof of insurance serves as evidence that the vehicle is insured for a particular period of time.

There are several types of auto insurance. Some are optional while others are required by law for all drivers. Sports cars and expensive cars have higher premiums.

Insurance policies are very specific about the insurance coverage. Usually, auto insurance provides property coverage, liability coverage and medical coverage. Property coverage pays for damage to or theft of the insured vehicle. Liability coverage pays for the legal responsibility of the owner of the vehicle to others for bodily injury or property damage. Medical coverage pays for the cost of treating injuries and rehabilitation. Medical coverage also pays for lost wages and funeral expenses.

In the United States, each and every one of the 50 states has different auto insurance law, coverage requirements and costs. Understanding the laws, regulations and coverage requirements in your state can provide you with a lot of benefits. For one, it can save you a significant amount of money on your auto insurance policy. It can also keep you legally protected in the event of an auto accident.

To Help You Make the Right Choice In Auto Insurance, Here Are Some Important Guidelines

1.    Shop for insurance before buying a vehicle.

The best way to save money on auto insurance is to get the best deal possible. And the best way to get the best deal possible is by shopping around for auto insurance. Shopping for insurance is best done before purchasing a vehicle.

Many people tend to stay with the same company not realizing how much money they could have saved had they shopped for insurance first before settling in an insurance company. Before purchasing a vehicle, compare insurance quotes first, at least twice a year as rates are always changing.

Comparing multiple company quotes will increase your chances of finding lower rates as rates vary from company to company. You can get free quotes online from insurance companies and independent agents, which are people who represent several insurance companies. Changing your mind if you find a vehicle with a lower rate is also possible. This is why you should shop for insurance first before you buy a vehicle.

2.    Take advantage of discounts or premium reductions, or special insurance rates such as:

a.    Low mileage discounts

The distance from your house to your work or school determines your daily exposure to risk. It also determines vehicle use, whether you use it for personal or business use. Your premium is calculated based on the average distance you drive annually or how far you commute from to work or school. Therefore, the shorter the distance you drive, the lesser your premiums will be.

b.    Good student discounts

Students who are currently enrolled and have good grades receive a discount on auto insurance. Many insurance companies offer “Good Student” discounts for young drivers who maintain a “B” (or 3.0) or above “B” average. Discounts are also offered to those family members who are attending school away from home.

c.    Multi-car discounts

You can reduce your premium by insuring two or more vehicles in one policy.

d.    Other policies

You can also reduce your premium by availing of other policies with the same company. Other policies may include homeowner’s insurance policy or life insurance policy. Various insurance companies offer discounts if you have your home insured with the same company that insures your vehicle.

e.    The Safe Vehicle Discount

Installing safety devices and anti-theft devices can earn you discounts. Many companies offer discounts for various safety devices, such as air bags and factory-installed mechanical seatbelts, as well as anti-theft devices installed on your vehicle, such as alarms and antilock brakes.

f.    Age – Being at least 25 years old

Once a driver has turned the age of 25, auto insurance premiums tend to be lowered. This may be because the driver’s rates are calculated in a different driver class. Risk assessors have determined that those who are under the age of 25 are more prone to accidents due to immaturity and inexperience at driving. The risk of at-fault accidents decreases when a person turns 25 as he or she is believed to become more responsible.

g.    The Good Driver Discount

Most insurance companies offer discounts for drivers who have completed a driver’s training course. Drivers who have not had accidents or received tickets in the last 3-5 years are also offered discounts. Avoiding traffic tickets and accidents can greatly increase your premiums. The insurance company could also cancel your insurance policy on your next renewal because of these.

h.    Avoiding installment fees

Sometimes, you can save on the premium by paying 6 months of an auto insurance premium in advance instead of monthly. Buying a 12-month policy can save you even more. This is because most insurance companies charge service fees for installment payments.

i.    Prior Insurance

Some insurance companies offer discounts to those who have been continuously insured for the last 6 months or more.

j.    Good Credit Score
A good credit score can lower your rate as insurance companies usually adjust rates by judging your risk.

k.    Car pooling

Some insurance companies offer carpooling, as well as public transportation, discounts. Logic says that the more you use car pooling and public transportation, the less you drive your vehicle. And the less you drive, the less likely you are to have an accident.

3.    Be knowledgeable about coverage

a.    Avoid unnecessary coverage. Do not pay for coverage that sums up to more than, or even the same as, what your car is worth.

b.    Consider higher deductibles when adding physical coverage to a vehicle. Deductibles are the amounts you pay out of the pocket before the insurance company pays for anything. The Higher the Deductible, the lower your premium.

However, if you get involved in an accident, the amount of our deductible will be the same amount that you will pay before your insurance company starts paying for the rest of the covered damage to your vehicle. So, be careful not to get involved in an accident.

c.    Avoid duplicate coverage or unnecessary coverage.  If you already have a health insurance policy, you might not need a medical coverage.  If you have an older car or if your car is not worth much, avoid unnecessary coverage such as collision. Paying premium for repairs on a vehicle you would probably replace if it’s badly damaged is not a good idea.

Well I hope that helps.

Warm Regards,

Fred Gagnon
www.AutoCarInsurance-Quotes.com