The Beginner’s Guide to Auto Insurance Your automobile is one of…
Nowadays, owning a car is a necessity rather than a luxury. The demand for newer, better, and safer cars has increased to such an extent that every year, 60 million cars are produced around the globe. That’s 165,000 cars per day! If you’re looking to lower your car insurance premiums, read on.
Facts and Statistics on Cars in the USA
In the USA alone, there are more than 30 brands that manufacture and assemble automotive. These brands alone account for the 7 million trucks and cars that are sold in the USA each year. According to the Hedges Company, the statistics obtained from the US Vehicle Registration Databases reveal that in the year 2020, there were 287.3 million registered cars in the USA. The state of California topped the list with the highest number of registered cars standing at 14,860,967.
So, what happens when such a huge number of cars are on the roads every single day? Accidents, car thefts, and the damage to cars as a result of unexpected events like vandalism, arson, the collapse of a building, or road.
In the USA alone, every year, there are 6 million car accidents. An average of 3 million people sustain injuries as a result of these car accidents, and around 90 people die every year. It is said that in the USA, 72% of cars get damaged during road accidents.
So, what does one need in case of such unpredictable, property damage, and life-threatening events? The answer is car insurance that covers medical expenses, legal expenses, cost of repairs, cost of removing the vehicle from the scene, cost of part replacement, and in some cases… full replacement of automobile.
What Is Car Insurance?
Car insurance is a coverage plan that protects you and your car in case of accidents, unwanted harm, and unexpected events. You pay a certain amount of money, either on a monthly or an annual basis, to a car insurance company. When a car accident occurs or somebody causes your car unwanted harm, e.g., if your car gets stolen, is vandalized, or is burnt, the company will assess the damages and the situation thoroughly. After the assessment, you are paid a certain amount to cover the damages, medical expenses, and the repair of your car. In case it is the other car that was damaged when it collided with your car, the insurance company will cover the damages and medical expenses for that driver too.
In the USA, all drivers are required to carry an active car insurance policy. 49 out of 50 states in the USA have made car insurance compulsory. The State of New Hampshire is the only state where drivers are not required to carry proof of their car insurance. However, even in New Hampshire, the drivers must show some proof of financial responsibility in case they hit another vehicle, a pedestrian, or public or private property.
The coverage that a car insurance policy offers you depends on which insurance plan you opt for. The basic insurance plan guarantees you protection against financial losses. For instance, if you are the one who caused a car accident, the insurance plan will cover the costs. However, you will be required to pay the excess amount, which is usually a fee that the insurance company sets for your plan. Once you claim your insurance, the monthly or annual premiums that you are required to pay for the insurance of your car will automatically increase. This is because now the company sees you as a liability.
There are different levels of car insurance that offer you different coverage plans. It really depends on you which one you opt for.
How to Get the Best Deal on Your Car Insurance?
There are three main types of car insurance policies – three levels, which provide different types of coverage for your insured car.
1. Third-Party Car Insurance Policy
This is the most basic level of car insurance coverage. It covers the damage caused to the cars and properties of others when your car collides with them. Third-party coverage does not cover the cost of damage to your car. For the damage to your car, you must pay for the repairs yourself.
2. Third-Party, Fire and Theft- Car Insurance Policy
This is the second level of coverage that car insurance companies offer to their clients. It goes a little further than third-party coverage and gives your car protection against theft and fire. In-case your car gets stolen or is destroyed by fire, the company will pay for the damages and will replace your car if it cannot be recovered or repaired.
3. Comprehensive Car Insurance Policy
This is the third and most comprehensive level of coverage that gives you and your car protection in-case of an accident, theft, or fire. Along with paying for the damages done to the cars and properties of third parties, this insurance policy covers the damages done to your car, the medical expenses in the case of injuries, legal expenses in-case a court case was filed, and may even cover you if you were driving someone else’s car or driving a rented car overseas. Some comprehensive car policies even offer a full replacement in case of unexpected events. For instance, if a building collapses and the debris falls on your parked car.
Before signing a car insurance policy, you must always weigh all the pros and cons to ensure that you are getting the coverage that you are paying for.
How to Calculate your Car Insurance Premiums?
The car insurance premium is the amount you pay to the car insurance company, either on a monthly basis or annually, for the insurance of your car. The car insurance premiums are calculated on a number of factors like;
- Your record as a driver
- Your years of experience as a driver
- Your car’s market value
- Your car’s safety features
- The conditions of the roads on which you drive on
- The number of drivers who will be using the car
For instance, the premium for your car will be a lot lower if you are a middle-aged driver with over 20 years of experience driving a car, live in a safe neighborhood with moderate traffic, and drive a family-friendly car that is not too expensive. However, if you are a young driver with less than 5 years of driving experience, have already caused an accident, been issued parking tickets, drive a high-performance, luxury car, and living in the busiest part of the city, then your car insurance premiums will be a lot higher.
6 Best Ways to Help You Lower Your Car Insurance Premiums
Paying for your car insurance premiums out of your pocket can sometimes feel as if you are being ripped off. The average car insurance premium in the USA is $200 per month. Even if you are a good planner and know how to live on a tight budget, $200 can seem like a lot when you take into account all the other monthly expenses related to your car, such as fuel cost, maintenance cost, parking fees, toll charges, etc. What if we told you that there are ways that can help you lower your car insurance premiums? Legal and simple ways that anyone can practice and benefit from. You’d be more than interested, right? After all, who doesn’t like getting discounts?
Below, we will be discussing the 6 best ways that can help you lower your car insurance premiums.
1. Make Annual Payments
Car insurance premiums are a lot lower when paid all at once. This once a year payment may seem like a huge amount, approximately $2,500, but the interest and bank transfer charges will apply once only. So, if your car insurance company asks you whether you would like to pay your car insurance premiums monthly or annually, opt for annual payments.
2. Register Your Car as a Dual Driver Car
One of the simplest ways to lower your car insurance premiums is to add another driver to the car insurance policy. You can tell the car insurance company that the car is being driven by both yourself and your family member or friend. Another good practice is to name a middle-aged driver with a good driving record as the other driver. This will give the car insurance company the confidence that a careful and experienced driver will be using the car, and therefore, the chances of accidents will be minimized. However, bear in mind that it is illegal to have the policy under your parents’ name if you are the car owner. The policy must be under the name of the car owner and the main driver.
3. Enroll in a Defensive Driving Course
The car insurance company wants to know if you are a careful driver or whether you will be a liability. As long as you are a careful driver and a law-abiding citizen, they will not mind giving you discounts on your car insurance premiums. Another good way to portray yourself as a responsible driver is by enrolling yourself in a defensive driving course. This will also help you improve your driving record and reduce points on your driving license. You can enroll in additional courses as well like accident prevention and road smart courses. Make sure that you enroll in courses that are accredited and are accepted on a national level.
4. Don’t Modify Your Car
Yes, those high-beam headlights and fancy bonnets look cool. But it is not a wise idea to modify your car and spend a large sum of money on upgrading your old car. The older your car is, the lower will be the car insurance premiums. Even simple things like installing stereos or new exhausts can increase your premiums. The car insurance companies send the cars for a full inspection before signing you up for a policy. They know if the car is in its original state or whether it has been upgraded.
Moreover, car modifications will give the car insurance company the impression that the modified car will be driven by a young driver. In their dictionary, young drivers are a synonym for bad drivers. And let’s face it, statistically speaking, that is the case. Young drivers drive more rashly and cause more accidents as compared to middle-aged drivers. So, avoid the urge to upgrade your old car if you want to get discounts on your car insurance premiums.
However, there are some modifications that will help you get more discounts on your premiums. These modifications give your car additional safety features. For example, you can install tracking systems, car alarms, and dashboard cameras to secure your car against theft and vandalism. These modifications can help you get a minimum of 10% discount on your car insurance premiums. Also, bear in mind that whatever modifications are made to your car must be declared to your car insurance company. Failing to do so can result in the rejection of your car insurance claims. So, be proactive.
5. Use Smaller and Simpler Cars
The more expensive the car is, the higher will the car insurance premiums on it. Large trucks and SUVs are not only expensive to buy, but their repair costs are also a lot more as compared to small, simple, fuel-efficient commuter cars. Driving a simpler, smaller car may not seem impressive, but it will help lower your car insurance premiums and save the environment. In fact, their maintenance is so simple and affordable that most times, you may not even feel the need to go through all that lengthy paperwork to claim the insurance money for the repairs.
You will be happy to pay $100 for the repairs out of your own pockets as long as it can save you from the hassle of claiming your insurance money. You can also get discounts on cars that have less mileage. The less you drive, the lower your premiums will be.
6. Benefit from Your Good Driving Record and Unclaimed Money
You should ask your car insurance company for discounts based on your good driving record. If you have a good driving record with a clean history and no record of tickets being issued, then you should use it to your advantage and ask for discounts. You can also tell your car insurance company to lower your car insurance premiums if until now you haven’t claimed your insurance money. The insurance companies offer bonuses and discounts on both these conditions so, try to avail these offers.
When there is a will, there is a way. Don’t settle for a coverage plan or car insurance deal offered by a single car insurance company. Do your own research and survey the market for the best deals and coverage plans. There are several car insurance companies that offer you the best plan at the lowest car insurance premium rates. In-case you like your current car insurance policy, then with our guide on the 6 Best Ways That Can Help You Lower Your Car Insurance Premiums, you can easily ask for a discount and benefit from the wide range of offers.
For more information and guidance on car insurance plans and policies, please feel free to contact us here at AC Insurance Services. We provide complete auto insurance for personal cars and RVs.