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- Why We Need Car Insurance?
- Steps of Buying Car Insurance
- Receive Your Quotes and Vet Them
- What Does Your Car Insurance Cover?
- Liability Insurance
- Uninsured Motorist Coverage
- Personal Injury and Medical Payments Insurance
- What to Look for in Good Car Insurance
- Gap Insurance
- Collision and Comprehensive Coverage
- Rental Reimbursement
- Full Glass Coverage
- Roadside Assistance Insurance
- Insurance Policy According to State
- Age and Car Insurance
Why We Need Car Insurance?
If you own a car, you need insurance. It is not only because it is mandatory in various states, but you can also save yourself from serious financial damage. In other words, car insurance ensures that a car accident won’t take you to the brink of bankruptcy. And lucky for you, buying car insurance has never been easier.
These days you can apply for and receive automobile insurance from the comfort of your home with the help of online applications. By answering a few short questions and filling out a form, you can apply for automobile insurance without even having to leave your home.
But for some of you who are new to car insurance and don’t know how to go about it.
Here is a comprehensive guide to get you through the application process.
Steps of Buying Car Insurance
The first step to buying car insurance is deciding how you want to buy it. When it comes to buying new insurance, you can do so by either going through an independent insurance broker or go directly to the insurance company.
Each of these approaches has its benefits, so let’s start with going directly to the insurance company.
Going to an insurance company directly for your auto insurance is always a smart choice; seeing how most insurance companies offer more than one kind of insurance.
So, if you already have any other type of insurance (such as life insurance, home insurance, and renters insurance, just to name a few), you can get a discount on your auto insurance or might get other benefits for having more than one insurance from a company, which is great.
The downside of doing this is that you restrict yourself to one company that may not have the best rates for you. So, to get the best rates, you can also do some legwork and go to different insurance companies to find their rates and get quotes from them.
That said, this takes a considerable amount of time and effort to pull off, and still won’t guarantee that you could get good rates from an insurance company. For some people, finding good insurance rates is just not worth the effort, which is why there are independent brokers.
If you are looking to skip the leg work that comes with finding the best deal for your auto insurance, then an independent insurance broker is just the way to go. By simply filling in one form for an insurance broker, you can get quotes from various insurance companies.
Moreover, since these brokers work closely with so many insurance providers, they can set you up with a company that offers the best rates and benefits.
Now you may be wondering if the quotes independent brokers provide are authentic or not. While your concerns are valid, as insurance rates are closely regulated, they are always consistent. So, you don’t have to worry about getting a different quote from insurance providers by contacting them personally.
Finally, if you plan on getting another type of insurance, or already own insurance, then a broker can also get you a discount on your auto insurance.
After choosing how you want to buy your insurance, the next step is to find out how much coverage you need.
Since we later go into great detail about what your insurance covers and how much you require, we won’t go into detail about it here. Instead, we will move on to the next step, which is filling out applications.
Filling Out Applications
One thing that both insurance companies and independent brokers share is the applications that you have to fill. For both of the insurance buying options, you will have to fill in an application for car insurance quotes.
The application will mainly contain certain questions about yourself, and a broker will give you quotes, depending on the answers that you give.
The information that you will have to provide in an insurance application is the names and birthdays of the people who will be driving your car, marital history, driving history, year and model of your car, education and employment status, and ownership information about the lender.
These questions can also change depending on the insurance provider or broker, so it is good to do a little bit of research before filling in an application.
The application, depending on the lender, can also ask you questions about certain aspects of your life. Although these extra questions won’t determine whether or not you get the insurance, they can make you eligible for a further discount on your insurance payments, which is great.
So, answering them can greatly help you in the long run.
They can ask questions like:
- Are you a military veteran?
- Does your car have an anti-theft system?
- Do you have a clean driving record?
- Have you completed your driver’s defensive driving and safety course?
- Do you have any other insurance policy?
- Are you a full-time student with good grades?
These questions can take off a sizeable amount of your insurance, or it can provide you with better rates.
Receive Your Quotes and Vet Them
Once you fill in the application, your carrier or broker will start going through your driving history; so, the process can take few minutes. Once you get your quote, they will give you certain options in terms of deductibles and premiums as well.
A deductible is an amount that you pay before your insurance kicks in, and premiums are what you pay to have the policy. So, if you choose higher deductibles, it will result in lower premiums and vice versa.
Hence you will have to find the sweet spot where you can pay the highest deductible you can afford so you will have to pay lower premiums.
It is very similar to down payment and installments that you pay for loans or when you lease. Keep in mind the higher the down payments, the lower the installments and vice versa.
There are many insurers who are offering no down payment or near zero down payment car insurance. You can take advantage of this.
However, just having the lowest premiums and the highest deductible is not everything. When you find the right insurance provider, be sure to do some research on them, and check their credibility.
Think of it this way, the best auto insurance policy doesn’t mean much if the company does not have good customer care service. So, be sure to check their rating on credible sites on the internet and check for any shady dealings that they may have done in the past.
Moving on, if you are completely new to auto insurance, then you probably don’t know what goes into your insurance. If you blindly rely on quotes, you may pay for something that you don’t want or need.
So, to help you make more educated decisions, here is what goes into your auto insurance.
What Does Your Car Insurance Cover?
Finding the right vehicle insurance can be quite a tricky process. Not only do you have to find an insurance that gives ample coverage, but you have to do so while keeping in mind what you can afford. This is also the reason why most people have a hard time finding the right insurance package for them.
Insurance companies can also add certain coverage that you otherwise wouldn’t need to make your package more expensive.
So, the question is, what does your car insurance cover?
The answer is a lot of things. While you may be thinking that a car insurance plan should cover the damage inflicted on your car, there are many more factors that come into consideration.
Let’s start with what is possibly the most important addition to your car insurance policy: liability insurance.
Liability insurance covers and pays for damage you inflict to others in an accident, including bodily injuries, property injuries, and in some cases psychological and traumatic damage caused by the accident.
So, liability insurance covers the medical bills of any bodily injuries, damages caused to the victim’s property during the accident and in some cases, will also pay for therapy that the victim will have to undergo.
The amount that you will receive greatly depends on the state that you live in, and the package you select.
However, most companies give a standard 100/300/50 to their customers, which translate as follows:
- $100,000 bodily injury per person
- $300,000 bodily injury per accident
- $50,000 property damage per accident.
While an insurance company does pay for certain damages during an accident, if the damages exceed the insurance plan that you have, you will have to bear the excess damages.
Uninsured Motorist Coverage
Even though a lot of states in the United States make it mandatory for you to have an insurance policy, it is not uncommon for you to run into an uninsured driver on the streets.
So, in the unlikely event that an uninsured driver crashes into your car, you may have to sue them for damages that they have inflicted.
However, they may not have the money to pay you for the damages, which is why it is important for you to have uninsured motorist coverage.
Uninsured motorist coverage pays for any damage that an accident will inflict upon you, without any fault of your own; in case the other driver does not have any insurance.
Another type of coverage is called underinsured motorist coverage, which is essential to help you if the other driver’s liability coverage doesn’t cover all of your medical expenses.
This coverage ensures that you won’t have to bear medical expenses that you weren’t responsible for. The coverage kicks in when the other driver’s liability coverage is not able to cover all of your medical expenses.
UM and UIM is mandatory in 19 states, and not having one can lead to very serious repercussions.
Other than the types of motorist coverage mentioned above, Uninsured Motorist Property Damage (UMPD) covers damage to your vehicle. The UMPD coverage ensures that your car is replaced or repaired in the event of a crash if the other driver doesn’t have insurance.
Personal Injury and Medical Payments Insurance
Accidents often happen with no fault of your own and can lead to massive physical and mental damage. These injuries, coupled with the damages to your car, can make for a very big hit: both financially and mentally.
So while you have insurance that pays for the damages to your car in the event that the other driver doesn’t have insurance (UMPD), it is important that you have a plan in place that can pay for your own medical bills.
Personal Injury Protection (PIP) and medical payments coverage (MedPay) are two insurance packages that cover all of your medical bills as a result of an accident.
PIP and Medpay can also pay for your hospital stay, doctor’s appointments, surgeries, and even funeral expenses. So, it is one of the most important packages that you need to have as part of your insurance.
Now PIP and Medpay, one or the other, is compulsory to have as part of your insurance package in 16 states, but its effects can differ from state to state.
In some states, PIP can also cover wages lost as a result of your injuries, whereas some states only offer MedPay that has lower coverage than PIP. That being said, we will discuss this in more detail in a section that specifically looks at how insurance differs from one state to another.
Every state requires you to carry some form of insurance to cover the damage that an accident inflicts on you or the other driver. The three insurance packages mentioned above are the minimum insurance requirements that you need to get in most states.
Now that you know what is present in most basic insurance packages, you may be wondering what you should look for in good insurance coverage? Well, let’s find out.
What to Look for in Good Car Insurance
The most important thing that you should look for in any good insurance package is coverage. While that may seem obvious, let us explain. As we discussed earlier, coverage can come in different types and can only apply to very specific situations.
Moreover, since deciding what coverage best suits you and what is best for you is completely subjective, we can’t tell you for sure what you should choose.
We can, however, give you some information about multiple types of coverage that most insurance companies and states offer so you can make a smarter decision.
The Primary Three
Liability Insurance, Uninsured motorist coverage, as well as MedPay or PIP, are the cornerstones to a good insurance policy. Since we have already gone into a lot of detail about these types of coverage, we won’t go into what it offers and what it does.
Instead, we will talk about why you should have them as part of your insurance package.
One of, and possibly the most important, reason for having these different coverage plans as part of your insurance package is because many states make it mandatory for insurance providers to provide these coverage plans to customers.
Think of them as the default applications that come with a brand new smartphone. While you may never use some of them or they may be completely useless to you, you can’t remove them and have to bear them on your phone.
The compulsory nature of the coverage is just about where their similarities with useless default applications end. The coverage options are comprehensive in their own right and essentially cover you for an incident that may occur with you behind the wheel; so, never think that your money is going to waste with your insurance.
Now we will move onto a coverage that very rarely makes it to your insurance package but can make all the difference, Gap Insurance. Gap insurance is a coverage that most insurance providers recommend to you if you are leasing a car or have a car loan.
Leasing is one of the most common ways that people buy cars and is also the most reliable way to get a car and slowly pay off the loan for it. But by leasing a car, you run the risk of having to pay the bank extra in interest if the car was damaged beyond repair. Gap insurance helps you pay the difference between the claim check and the money that you owe to the bank.
The gap insurance will often be a part of your original lease that you will get from the car dealer and can come in handy when your original liability insurance or UMPD cannot pay off the entirety of the loan. Through this, you can save yourself from paying extra to the lender.
Gap insurance may be subjective to your insurance lender and state, but you should still contact your lender to find out whether they provide it or not.
Collision and Comprehensive Coverage
Although liability insurance is the coverage that saves you from having to pay for damages that you may inflict upon someone else’s car, it does not offer anything to you or save your car in some way.
This is where collision and comprehensive coverage come in and save you from the hassle of having to go for another lease or loan for a new car.
Collision coverage pays to fix your car or reimburse you for what the car is worth currently if it is damaged beyond repair. This is possibly the most important coverage to have as it helps you repair your car, or get a new one if need be.
Now, this is, of course, a completely optional coverage that you have to get only when you think that your driving might put your vehicle at risk. You can find both of these coverage options together in some states, but other states can offer both of these separately.
Moreover, most states do not make collision and comprehensive coverage mandatory for car owners. However, your car dealer may ask you to get both collision and comprehensive coverage for your car before they offer you a lease or a loan for your car.
The days following an accident are some of the hardest days to deal with, as you have to manage your commute without a car. One of the ways people go about solving this problem is by renting a car for a few weeks, so they have an independent form of commute as their car is repaired.
On the other hand, renting a decent car can be quite expensive, especially in bigger cities, like New York, San Francisco, Chicago, Miami, and so on.
Hence, people resort to the next best thing, rental reimbursement. Rental reimbursement is insurance coverage that essentially pays for your rental cars when your current car is being repaired.
Nevertheless, you cannot just claim the rental reimbursement. You have to first have collision or comprehensive coverage as part of your insurance plan. And second, you must have claimed your coverage to fix your car. Only then you can take advantage of rental reimbursement coverage that most insurance providers offer.
Full Glass Coverage
Repairing the glass for your car, whether it is the windshield or the door windows, is quite expensive. So full glass coverage ensures that you don’t have to deal with broken or chipped window glass for your car.
With this coverage you no longer have to worry about your car’s broken or chipped glass, saving you a lot of time.
Roadside Assistance Insurance
Almost every driver’s worst nightmare is their car breaking down far from the city. In this case, what you can do, what you should do, and what you can do is probably making you a little anxious just reading it. That said, cars breaking down is no longer that big of an issue, as you can simply call a tow company and they can help you out. But that costs money.
As much as we want it to be true, towing companies are not social workers looking to help you in your time of need. These companies work for money, and can often charge a lot depending on where your car broke down and whether it needs towing at all; making roadside assistance insurance all the more necessary.
If you are someone who has to make frequent trips out of the city, then it is likely that you already have this coverage. But if you don’t, you may be paying a lot more than necessary for towing services.
With this coverage, you won’t have to worry about how much it will cost to get your car back to the city. This insurance also covers some very important aspects, such as flat tires, jump starting your car, and some minor mechanical fixes.
Now that you know all of the different types of coverage plans that an insurance company can provide you, you can make better decisions when it comes to what insurance do you need. Through this, you won’t have to pay extra for coverage that you don’t need.
However, this does raise a strange question, how much insurance do you really need? Although you can pick and choose the right coverage plans that best suit you, you can’t really decide that, especially if you are a novice driver.
So, instead of you throwing out insurance that you may need, in the next section, we will discuss how much insurance you need.
How Much is too Much?
Car insurance is one of the best types of insurance that you can get for yourself, as it can save you from massive damages that you would otherwise have to pay for yourself.
That said, it is not as simple as most people would like to believe. As you saw previously, insurance is for different parts; each of which covers a specific part of your insurance.
This way you don’t have to pay for insurance that you wouldn’t use, and can get the insurance that suits you best. You may want to get the minimum required by a state (more on this page), as you think it’s “good enough.” But it is possible that this minimum won’t be enough to pay off the damages that an accident can inflict.
As one out of every eight drivers in the United States does not carry any form of automobile insurance, it has never been more important for you to be carrying sufficient insurance.
The Minimum is not Enough
Although you may be thinking that the minimum insurance that your state provides is enough for you, you should also know that if damages exceed your insurance, you will have to bear them. If your minimums are not able to cover the damages to either the other driver’s car or medical bills (or even your damages and medical bills), you’ll be forced to pay the remainder of the amount.
So if you have a higher insurance limit, you won’t have to bear the expensive bills and damages that come with accidents. Even though your insurance won’t be paying anything if it is the other driver’s fault, that is mostly not the case.
Since most drivers don’t have automobile insurance, they won’t be able to pay off your damages unless you choose to press charges. Even if you do press charges, it is highly unlikely that they will pay.
Now you have to depend on your insurance to pay for injuries and damages that aren’t your fault.
So this brings the question, how much insurance should you get?
Collision and Comprehensive
As we said before, we can only suggest what coverage you should choose, considering your financial position. That said, collision and comprehensive coverage are incredibly important for your insurance policy as it can greatly help you in a situation where you crash your car into another car, light post, or a fire hydrant.
If that isn’t reason enough to get collision and comprehensive coverage, it can also compensate you for the current price of the car in the event of fire, theft, explosions, or other unexpected problems. So, in the event you are involved in an accident, this can at least cover property damage that may have arisen as a result of the accident.
So, regardless of your state minimums, having this coverage will greatly benefit you in the long run. Even in case, the other driver’s insurance covers your liability needs, but their insurance falls short, your insurance can cover you till the other driver pays.
Protect Your Assets
Another reason to increase your minimums is that your insurance may not be able to pay for all of the damages that you have inflicted, and the other driver might make a claim on your assets. It is common for people to take drivers to court when they fail to pay for damages.
So by having extended minimums, you can avoid trips to the court that you might have to take because your insurance didn’t cover it.
That said, minimums can save you some much-needed cash. If your assets don’t amount to much, there is little to no reason for the other driver to sue you.
So, if you were to have state minimum insurance and no assets, you could save yourself some money. But many experts advise against this, as the damage is too high and you may have to file for bankruptcy; which is a serious issue on its own.
Now that you can make a better decision when it comes to your insurance let’s move onto the different insurance in states. Insurance rates differ depending on the state, and the state you live in can make a huge difference in the type of insurance policy you choose.
Insurance Policy According to State
This section will include all of the information about insurance in different states as well as the general insurance policy that almost every state universally accepts. This section will also answer any questions that you may have about a state insurance policy.
While this may seem like the most obvious of details, insurance policies change according to the state. If one state has a minimum to include collision and comprehensive coverage, it is quite possible that other states may not have it.
And since this is the part where we tell you to check your state minimums we have decided to save you that trouble and mention it all here. So, you’ll find minimums and primary coverage plans that differ by state.
Let’s start with the most obvious price. Regardless of whether or not coverage changes from state to state, price is always a differing factor in states. If a state has an average price for their insurance policy, it is highly unlikely that any other state would have the same price.
The average price is $1,426 annually, some states far exceed that, and some barely come close.
All the prices below are estimated; to know the exact price you have to compare instant quotes.
States that are less densely populated and have a higher rate of responsible drivers, enjoy cheap car insurance rates. Some examples include New Hampshire ($1,105), Hawaii ($1,081), Vermont ($1,075), Iowa ($988), North Carolina ($947), and Maine ($896); just to name a few.
Other states like New York ($1,688), Texas ($1,827), Kentucky ($1,898), Florida ($2,059), California ($1,815), and Michigan ($2,639), have very expensive average car insurance plans. These higher prices are mainly because of the population density in certain areas.
Think of it like this, in small heavily populated states there is a higher risk of accidents than a larger state with a small population density. Hence, insurance companies will be willing to charge more for insurance due to increased risk.
That said, this higher price is not just because these cities are densely populated, but state regulations can also play a large role in the price difference between states.
When states decide on the minimums for insurance, insurance companies automatically make the base price of the insurance more expensive. In other words, since minimums tend to vary from state to state, so will the base price for insurance packages.
Speaking of minimums, they do not change significantly between states. Most states will have the same minimum coverage but will have different values for their minimums. A good example is Iowa and Idaho. Both of these states are different in their own right, yet both of them are some of the cheapest states in the US in terms of car insurance.
While both of their averages are not that far apart and they offer the same minimums, Iowa ($988, bodily injury and property damage liability) and Idaho ($1,018, bodily injury and property damage liability), they both have different values for their minimums. Where Idaho offers 25/50/10, – $25,000 per person, $50,000 per accident, and $10,000 in property damage – Iowa offers 25/40/15.
Other than the differences in a minimum’s value, most states have different minimums in general. Depending on the state, you may have a minimum which includes a lot more coverage than you would know what to do with; this is the case with Kansas.
Apart from it being slightly higher than the national average, Kansas ($1,428) offers its citizens quite hefty car insurance minimums. Other than bodily injuries and property damage liability, Kansas also provides personal injury protection and uninsured motorist.
Kansas also gives a slew of other benefits such as $4,500/person for medical expenses, $4,500 for rehabilitation expense, and up to $900/month for disability or loss of income for a year.
Kansas, in its own right, is an outlier that gives out incredibly high minimums, and what also helps is the fact that it is a state with a lower population density. All other states offer bodily injury and property damage liability as to the bare minimum when it comes to automobile insurance.
Other states such as Maine, Maryland, and Massachusetts offer uninsured and underinsured motorist coverage as a minimum. There are plenty of sites that allow you to check the average cost of car insurance in your state to check if you are paying extra.
But even if you are paying extra, it is possibly because of two reasons. First is because of the zip code and the traffic that surrounds it. And second is the company itself.
How Company’s Influence Price
As much as we don’t want it to be the case, most insurance providers can make you pay extra for insurance that you get from them; even if they offer the same minimums as everyone else.
Insurance companies run on the concept of risk, so if you pose more threat as a driver, then the company may ask you for higher premiums or deductibles as a result.
On the other hand, companies also rate their prices based on their experience, statistical information that they refer to, and the cost of doing business. But you may be wondering how they assess risk when it comes to customers?
Age and Car Insurance
There are a lot of factors that can determine the price of insurance policy, and age is one of the major components among them. Young drivers generally drive recklessly, in most of the cases.
Therefore, it doesn’t come as a surprise that insurance for young drivers is higher than usual. We are not saying that everyone is the same, and for that reason, we give a chance to young drivers who are driving carefully and responsibly.
Check our posts and get our cheap car insurance quotes for 18 years old. Here you can find all the advice on how to make the policy more affordable.
If you are 20 years old, your struggle of getting low-cost car insurance shall slightly be reduced. The age is considered as sufficient age to drive safely and probably you already have two years of driving experience.
As you get more experienced in driving a car, there are more desirable deals for you. We are glad to offer you the car insurance for 20 years old drivers. Don’t forget to get a free quote!
When you are a young driver, you are at a high risk to almost any insurance company. The statistics show drivers in their early 20’s are more likely to be involved in car accidents.
Therefore, it doesn’t come as a surprise that young drivers usually have to pay more for insurance than others. If you are almost 25 years old, that makes a big difference when it comes to motor insurance.
There are great options for you, and now that you are an experienced driver you can enjoy all the benefits of motor insurance! We offer you car insurance under 25 quotes, with all the covers you need.
No matter your age, when it comes to insurance there are always ways to lower down your rates. The older you are the better as you will be considered as a mature driver. However, after a certain age, the situation changes. For seniors, the price could be high also.
Most of the seniors face eye weakness and other problems which hamper their driving capability. After 50 years, the cost may not increase a bit but it is possible to get a plan easily.
Age is a very big factor that almost every insurance provider takes into account when offering insurance. If you are relatively young and do not have a lot of driving experience, then most companies will give you a much higher deductible or a premium. They will also take into account the age and model of your car.
Insurance companies will often use statistics to find how often a specific model of a car is prone to breakdown. The age of your car will also tell how likely it is for your car to malfunction. They may even check where you take your car on a daily basis and where you keep it, as well as your credit rating.