Your Guide to Auto Insurance
Insurance has been around for centuries. The Greeks and Romans wanted to insure that their cargo would come through when using boats to deliver goods. The Babylonians used a contract of bottomry, which insured that ship owners did not have to pay back lenders the full amount if there was some accident that caused their cargo to not arrive. Insurance is used in case there is an accident or foul play.
By the 1920's ships had been replaced by cars and cargo had been replaced by people. With the auto revolution we were seeing that cars could cause financial and personal devastation. Because of this, Massachusetts was the first state to require insurance for all drivers in 1927. By 1940 many of the states saw the need for motorists to be insured. Insurance protects the driver, the passengers and any third party involved in any type of accident.
What is Auto Insurance?
You have seen all the commercials from the big companies trying to get you to buy their auto insurance, but what is it? What are you paying for? Auto insurance is your contract with an insurance company. You agree to pay the set premium and they agree to cover losses in case of an accident. The insurance company can cover property damage if something happens to the actual car. The insurance company can cover medical costs if anything happens to people inside the car. The insurance company can cover your liability to anyone else involved in the accident.
What Are the Types of Auto Insurance?
Auto insurance is broken down into six different types of coverage.
- Bodily Injury Liability: Covers your liability to people that are hurt
- Personal Injury Protection: Covers injuries to you and your passengers
- Property Damage Liability: Covers damage to others property
- Collision: Covers damage to your car from hitting another car or object
- Comprehensive: Covers everything which is not covered under collision
- Uninsured Motorist Coverage: Covers you if the other driver does not have enough or any insurance
What Types of Insurance are You Required to Carry?
The requirement that states which auto insurance that you will have to carry varies from state to state. Your coverage is also affected based on whether or not you own the car. Most insurance companies will require that you carry at least liability, but this will vary.
How does Auto Insurance Work?
When an accident does happen this is when you have to get your insurance company involved. You will have to call them to get the claim process started. Having good coverage and good customer service will be the key factors when this comes to pass. You will highly likely be upset when an accident happens; you want to have a good team working for you.
How Much Does Auto Insurance Cost?
Auto insurance rates are determined by estimating the risk of the driver. Car insurance companies will look at:
- Vehicle Type
- Accident History
- Driving Record
- Annual Mileage
- Marital Status
- Credit Score
How Can I Lower the Cost of Auto Insurance?
There are some things that you can do to affect the cost of insurance and some things that you have no control over. For example, you cannot change your gender or age. You can lower your auto insurance rates by trying the following things:
- Increase your deductible
- Bundle your car, home and personal insurance
- Take a safe driving course
- Drive fewer miles
- Have the newest safety features in your car
- Raise your credit score
What is a Deductible?
Your deductible is the amount that you will pay if there is an accident. For instance, if there is an accident that costs $3000 worth of damage to your car and you agreed to pay a $500 deductible then you would pay $500 and your insurance company would pay $2500.
What Should I Look For When Looking for "Good" Auto Insurance?
Your auto insurance company is going to be your partner when things get bad. You want to be sure that this is the team that you want on your side. Some of the things that you want to consider when choosing an insurance company are:
- Level of coverage
- Level of customer service
- Discounts for good driving
- Discounts for military service
- Extras such as rental insurance and roadside assistance
Why Would I Need Auto Insurance?
Everyone needs auto insurance. You can thank the Babylonians for that. From hitting a pothole to hitting a tractor-trailer, things can happen when you drive. You may be the best driver on the road, but who is out there with you? Having auto insurance keeps you safe.