Car insurance is one of those things you think you don’t need until you do. After a severe collision, it quickly becomes a necessity. Whether you want to insure your first car or find your dream vehicle, your policy decision matters.
However, many options are available, which can easily confuse someone new to the world. Below, we take a look at some common questions to help you find the best policy for you.
What Impacts My Premium?
An increase in your insurance premium can be frustrating, especially when you have a solid driving record. Generally, the reason it rises is connected to insurance risk.
Supposedly, these rates are personalized based on an array of factors, including your accident history and age. Insurance companies claim that these calculations are rooted in the likelihood you will file a higher number of claims, which would cost them money.
For instance, women have a lower statistic regarding collisions, which translates to lower premiums.
Premiums change due to a range of factors, including:
- Your history of claims, especially when you were at fault
- Driving an expensive vehicle, which increases the odds of theft and the potential cost of repairs
- How often and far you drive
- Whether the vehicle has quality safety equipment that helps you avoid accidents
- Having additional vehicles and drivers on the policy
Will My Job Impact My Premium?
Insurance providers analyze a large swath of information to determine premiums. Part of this equation is the nature of your job. While it may seem inconsequential, it can cause a significant change in your rates.
For instance, those in retirement tend to have lower rates. As more experienced motorists, they are less likely to get into an incident. Moreover, they drive less because they have no commute.
On the other hand, certain jobs are high-risk to providers while others enjoy a lower premium. When a driver uses their vehicle for work, such as for a rideshare service, they’ll likely see an increase in their premium.
From the provider’s perspective, being on the road more often adds to wear and tear and increases the likelihood of an accident.
What Is a Deductible?
You may be familiar with the idea of a deductible if you know your health insurance policy. If not, this is the amount of money deducted from the coverage available.
In layman’s terms, it’s the amount you pay out of pocket before the company covers the costs of your claim. For instance, if your deductible is $1,000, and you file a claim for an accident, you must first pay that amount for repairs or replacement. Then, the insurance company covers the rest of the expenses.
Typically, you can choose a higher deductible for a lower monthly rate. However, it’s essential to choose an amount you are confident you can pay.
Ultimately, you have to go with your preference:
- Higher out-of-pocket costs in the event of a collision and a lower monthly rate
- Lower out-of-pocket costs and a higher monthly premium
A higher deductible policy may be the right choice if you are less likely to get into an accident. However, this isn’t always a safe bet. Car accidents can occur at any point.
Shopping Around for Policies
Car insurance companies are extremely competitive. So, rates fluctuate according to a range of factors. The company that offers you a great package one year might overcharge you the next.
It’s always a good idea to compare your options and shop around for a policy that feels like the best deal. Typically, it’s good to look around at least once each year. Additionally, remember that a cheap policy isn’t necessarily good.
Carefully consider the coverage you need to gain peace of mind and financial security. If a policy seems too good to be true, it probably is…
While you have the option to switch providers at any point, start comparing quotes a couple of months before your automatic renewal. Doing so helps you avoid cancellation fees. Generally, renewals happen in six or twelve-month intervals.
If you go into the renewal with a better quote, you have the leverage to negotiate a better deal for yourself.