As of 2019, studies by the Federal Highway Administration showed that approximately 93 percent of all American households had at least one vehicle. While owning a car has many benefits, it has a fair share of responsibilities. Car owners in all the states except Virginia and New Hampshire are required by law to have auto insurance.
At some point, you’ll have to go into the market looking to purchase car insurance. Not only do you want to choose the right coverage, you’re likely hoping to find an affordable car insurance policy. Here’s some things to be on the lookout for:
Why is Car Insurance Important?
Data collected by the National Highway Traffic Safety Administration showed there were over 6.7 million police-reported vehicle collisions in the US in 2018. The average claim for each crash that year was 3,584 dollars. Road accidents are inevitable and can happen even with an experienced driver behind the wheel.
They can leave you struggling financially, especially if you don’t have an auto insurance policy. Your coverage may help cover the cost of property damage and injuries resulting from a car crash. It can also cover your vehicle against theft or damage due to incidents such as a tree falling on it.
5 Five Factors to Consider When Choosing Car Insurance
As predetermined, choosing car insurance can be daunting. Although many car owners go for the cheapest options, you should look for a plan that can offer maximum protection to you and your family following a car crash. To ensure you choose the best package, consider the following factors.
- Your budget
- The type of car insurance you need
- The type of car you drive
- Your resident state
- Your credit rating
Before starting shopping, you should decide how much you’re willing to spend on auto insurance. Meanwhile, remember that inadequate coverage may leave you responsible for thousands of dollars in damages if your vehicle gets into an accident. Because of this, you’d rather have too much coverage than not enough.
Car insurance premiums typically depend on the car owner’s circumstances. However, some individuals should be ready to pay more premiums than others. For instance, teenage drivers often pay higher premiums than any other age group. Studies have shown that teen drivers are more than three times more likely to get into a crash than motorists in any other age group.
Due to this reason, their premium charges may be higher than those of other drivers. Your auto insurance premiums may also be higher if you’re an adult with little or no driving experience. If you’re working with a small budget, you should consider choosing a plan with a high deductible.
Deductibles are payments you’re required to pay for a claim. If you pay higher deductibles, the amount your insurance carrier will have to contribute to the overall costs will lower. Consequently, the price of premiums payable may also reduce. As a bonus tip, you should pay your premiums yearly or bi-annually. Many car insurance providers may charge more to customers making monthly payments.
Type of Car Insurance You Need
After reviewing your budget and determining the amount you can spend, you should now decide the type of coverage you need. Most states require car owners to have liability coverage for their vehicles. It can cover damages caused by bodily harm or property destruction incurred by another person in a car crash.
Besides liability insurance, you should also have a collision insurance policy, which can help pay for car repairs resulting from an accident. Car owners should also consider getting comprehensive car insurance, which can cover damages resulting from crashes that don’t involve other road users.
You can add a Personal Injury Protection policy if you need extra coverage. The plan covers accident-related medical costs not covered by an individual’s health coverage plan. PIP policies may also help cover lost wages experienced following a car crash.
The Type of Car You Drive
The car you own can determine the premiums you pay. If you own an expensive vehicle, your premiums may be higher since its repair costs may be higher following an accident. Additionally, flashy, exotic, and luxurious vehicles are at a higher risk of being stolen. That’s why insuring them may cost more.
Insurance companies also do their due diligence and compare different statistics to help identify cars with poor safety ratings. Such vehicles have an increased chance of getting involved in accidents, which is why car insurance providers will charge higher premiums.
The State Your Reside in
Your resident state may impact the car insurance premiums you’ll have to pay. The minimum requirement for liability insurance varies from state to state. Authorities in some jurisdictions require drivers to have policies such as PIP coverage. The law requires insurance carriers to inform clients about the minimum coverage requirements. You may also find out these details by contacting state authorities overseeing auto insurance matters in your region.
If your resident state is prone to extreme weather, has poor roads, or has a high road carnage rate, your car insurance premiums may be higher. Taxes payable by insurance companies to state authorities may also determine the cost of the premiums.
Your Credit Rating
Insurance companies can evaluate customers’ credit ratings to determine if they pay their dues on time. If you’ve maintained a habit of paying your bills late, your auto insurance provider will charge higher premiums. Additionally, you may have trouble finding a carrier altogether if you were on the receiving end of a policy cancellation due to non-payment.
Even if you’ve always paid your car insurance premiums on time, the carrier may perceive you as a risk if you’re behind on your mortgage or credit card bills. On the other hand, if you have a stellar credit history, your insurance provider will trust that you’ll pay your premiums on time and offer lower prices.
Select Your Auto Insurance Plan Today
The above factors should guide you in your search for affordable car insurance. At Tread, our goal is to help you protect your car without much hassle. We try and provide you a wide range of options to suit your needs and are here to help a long the way.