Auto-Insurance: Knowing Which Shoe Fits Author:    Posted under: Auto InsuranceAuto Insurance questions answered

The world we live in today secures most of the material things that we care the most about.  Commercialism and media make it all easier for these companies to capitalize on the need for these things, but do we really know why we need it?  Do the consumers really know what premiums they are paying for, and understand the extent of the protection they are getting out of it?

There are a number of insurance that we avail of- vehicle insurance, health insurance, life insurance, property insurance- the list goes on.  Insurance is actually a form of risk-management, wherein ‘the risk is transferred from one person to a more financially-sound entity in exchange for a payment.’  These payments can be set up with the company to be paid for in a monthly, or an annual basis.

Perhaps the most common insurance that we avail ourselves is the auto insurance, next to health insurance.  Since the law requires that a resident should have a form of auto insurance, how do we even begin to look and avail of this insurance policy?  Here are some steps to ensure that you are not just paying for an insurance premium for your vehicle, but also getting your money’s worth for it.

Understand that there are different types of insurance coverage. The two broad types of coverage are liability insurance and comprehensive insurance. Liability insurance pays for bodily injury (medical expenses, pain, and loss of wages), damaged property, and defense and court costs.  Comprehensive insurance, on the other hand, pays for damage caused to the vehicle that didn’t occur in an automobile accident.  It covers force majeure – loss caused by fire, wind, hail, flood, and the like.

Be aware of your state’s laws regarding auto insurance. In all forty-seven states, car insurance is required by law.  Minimum policies may differ per state.  Aside from the two broad categories which were aforementioned, there is also what you call PIP or personal injury protection.  Some states require this so that regardless who is ‘at fault,’ the insurance pays for the medical expenses for the driver of the vehicle.    Most insurance agents will recommend that you purchase more than what is required by your state, so make sure that you know what minimum coverage you need to have.

What exactly do you need? Most consumers’ mistake is that they get to buy what they don’t exactly need.  It’s the same thing for insurance policies.  Is your car leased? Is your car rented?  Do you want the company to pay for costs when it needs to be sent to the mechanic?  Do you need additional payments for parts when it needs to be repaired or replaced? What if your car gets totaled?  Do you need it to be replaced with another unit?  Is your car old and battered? Does it need to have insurance still?

How much money are you willing to shell out? People are mostly apprehensive to shell out money “in the event that” an accident does happen.  It is a gamble, spending a considerable amount of money in something that may appear to not be readily tangible to the consumer at the moment.  However, think about it.  If you do get into an accident, how much will you be shelling out from your own pocket?  Aside from the hassle of fixing all of the details yourself, you also have the burden of being responsible for taking care of the costs incurred by the accident.  Whereas, if you do have insurance, the company will now be personally responsible for the damages, and not yourself.

So how much does auto insurance really cost?  There are a number of things that affect the price of your insurance policy.  First is the type of car that you own.  Do you have a brand new car, or a second hand one?  A reliable sedan or a handsome sports car?  Always remember that your coverage will be based on what type of car that you own.  Second is the community where you live.  Do you live in the rural areas?  Do you live in the city?  Do you live in a posh neighborhood or do you live in a place known for vandalism and/or theft? These things come into play as living in a higher-risk environment will definitely have you paying a higher fee anyway.  Third is how often you drive to and from specific places where you work.  Do you live near your workplace? Do you need to drive a lot to reach your destination?  Finally, it depends on you, too:  how old you are, what your sex is, your marital status, etc.  Younger drivers are more accident prone, therefore they require higher insurance rates.  If you are also a reckless driver then you would expect that insurance coverage for you will be higher than normal.

See, choosing the right insurance policy for you may be a little bit confusing.  Make sure that you determine what you need, and what you are able to get.  Don’t forget to shop around first!  Because after all, the excitement lies in having to collect, compare, and then select which one is the best one for you.


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