Car Insurance – The Good, The Bad And The Ugly

Auto insurance is designed to protect drivers from the costs of injury or vehicle damage that results from an accident – or from the expense of causing damage or injury to another driver. Although insurance is sold, purchased and regulated at the state level, every driver in the country is obligated to be covered by basic insurance.

Car Insurance - The Good, The Bad And The Ugly

Different Kinds of Auto Insurance

There are four basic types of auto insurance. Liability insurance covers injuries and property damages to other people. Then there is coverage for your vehicle. Next is coverage for medical expenses and finally, coverage against uninsured motorists.

What Determines How Much I will Pay?

Many factors can affect the rate – or premium – that a driver pays for a particular insurance plan. This includes the age and gender of the driver, the type of car, the purchaser’s driving history and even the driver’s credit score. Like lenders, insurance companies weigh applications based on the perceived risk level associated with each individual driver.

Finally, the deductible the driver chooses affects the premium. A deductible is the amount of out-of-pocket expense the driver is responsible for in the case of an accident, damage, theft or anything else. If the driver has a deductible of $500 and does $2,000 worth of damage to the car, the insurance company pays $1,500 and the driver pays $500.

Will Filing a Claim Make My Rates Go Up?

The article “How a Personal Injury Claim Can Affect Your Car Insurance Rates” points out that Florida is one of the most expensive states to own a car. In that state, the driver’s insurance covers the cost of minor injuries no matter who was at fault. Each company has its own criteria for determining what how rates are affected, but if a claim is filed, it is likely that rates will go up if the claimant’s insurance provider doesn’t have “accident forgiveness,” or some similar offering.

Consider “bundling” your insurance plans. When you buy more than one kind of insurance from the same company – auto, boat and fire, for example – you are more likely to be offered a lower price. The next best way to get a lower price is to simply talk to your insurance provider and see if they give discounts for being a student, being in a union, driving a hybrid or anything else that insurers reward with discounts. Shop around and work to improve your credit score before you decide – although it is controversial, most insurers factor in your financial history.