10 Things You Should Know About Buying Auto Insurance Today
Insurance Company Charges Determination
Insurance companies underwrite to assess an applicant based on the risk involved, after that, he or she is then grouped with other similar risks and decide if the company will accept the application.
Based on the results of the underwriting process, the rating assigns a price based on what the insurer believes it will cost to assume the financial responsibility for the applicant’s potential claim.
These two factors determine what you pay for auto insurance. The first factor is agreement and the second factor is rating just as i mentioned above.
GUIDELINES BEHIND BUYING AUTO INSURANCE
Each USA insurance company has their own rating system, But today, am going to show you general guidelines that all companies follow.
Before i drop these guidelines, i will like us to talk about insurance claim frequency which i will say it is kind of linked with the insurance guides am about to list.
Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. It will surprise you to know that the single greatest influence on the rating process is claim frequency. This does not mean how many times you specifically have made an insurance claim, although that will have an additional effect. Persons sharing characteristics with high claims groups will be charged more for insurance coverage.
Tort System vs. No-Fault System
Each state must implement either a tort system or a no-fault system. The system your state has implemented will determine what kind of insurance is available to you. The three basic coverages sold under the tort system are bodily injury liability insurance, property damage liability insurance and uninsured motorists coverage. In a no-fault state, coverages will vary, but under a no-fault system your insurance company pays you directly for your losses as a result of injuries sustained in an accident, regardless of who is at fault. Check with your state insurance department for questions concerning tort or no-fault state systems.
Check Into Optional Coverage
The most commonly recognized coverages, in addition to the basic liability package, are collision and comprehensive coverages. Collision coverage pays for physical damage to your car as a result of your auto colliding with an object such as a tree or another car. This is relatively expensive coverage and is not required by law. Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. This coverage will also cover broken glass and windshield damage. Comprehensive coverage is less expensive than collision, but is also optional. Other optional coverages include medical payments coverage, rental reimbursement coverage and towing and labor coverage.
Shop Around Before You Buy
When shopping for auto insurance, premium quotations are a useful tool for comparison of different companies’ products. When asking for price quotations, it is crucial that you provide the same information to each agent or company. The agent will usually request the following information: description of your vehicle, its use, your driver’s license number, the number of drivers in your household, the coverages and limits you want.
Where to Shop
Check the newspaper and yellow pages of the telephone directory for companies and agents in your area. In addition, ask your neighbors, relatives and friends for recommendations on insurance companies and agents. In particular, ask them what kind of claim service they have received from the companies they recommend. Remember to shop around to get the best price and service.
Specific Factors that Affect Your Rate
Your driving record – drivers with previous violations or accidents are considered to be higher risk
Your geographic territory – urban areas have more claims than rural areas
Your gender and age – males have more accidents; certain age groups have more claims
Your marital status – married people show lower rates of claims
Prior insurance coverage – if you have been cancelled for non-payment of premiums
Vehicle use – higher annual mileage results in higher exposure to risk
Make and model of your vehicle – luxury and sports cars average a higher number of claims
Ask Your Agent About Discounts
Discounts are awarded because the insurance company sees you as a “better risk.” Here are some discounts you should look for: multiple vehicles, driver education courses, good student, safety devices, anti-theft devices, low mileage, good driver/renewal, auto/home package and dividends. Not all states offer all discounts, so check with your agent to see if you qualify.
Where to Go for More Information
Information is available to consumers from a number of unbiased sources. These sources include public libraries, state insurance departments, online resources, consumer groups and consumer publications. Every state insurance department has personnel available to answer questions regarding auto insurance coverage and many departments publish premium comparisons to make shopping around easier.
For Your Protection
Once you have selected the insurance coverages you need and an insurance agent or company, there are steps you can take to make certain you get your money’s worth. Before signing an application for any insurance coverage, call you state insurance department and verify that the company and the agent are licensed to do business in your state. It is illegal for unlicensed insurers to sell insurance, and if you buy from an unlicensed insurer, you have no guarantee that the coverage you pay for will ever be honored.
Read Your Policy Carefully
You should be aware that an auto insurance policy is a legal contract. It is written so your rights and responsibilities, as well as those of the insurance company, are clearly stated. When you purchase auto insurance, you will receive a policy. You should read that policy and make certain you understand its contents. If you have questions about your insurance policy, contact your insurance agent for clarification. If you still have questions, turn to your state insurance department.
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