If you’re like most people, you probably don’t think about auto insurance until you need it. And knowing what to do when that time comes is crucial. In this blog post, we will discuss six things that all drivers should know about car insurance. By understanding these concepts, you can make sure that you are fully protected in the event of an accident.
You Should Know How Prices Are Determined
Auto insurance rates are determined by a variety of factors, including your driving record, the type of car you drive, and your age. Insurance companies use this information to assess the risk of insuring you, and they set prices accordingly. If you have a clean driving record and drive a safe car, you can expect to pay less for insurance than someone with a poor driving record or a high-risk vehicle.
However, even if you are a safe driver, your rates can still go up if you are involved in an accident that is determined to be your fault. Insurance companies also consider your age when setting car insurance rates, as younger drivers are generally considered to be riskier than older drivers. There are a few things that you can do to keep your rates down, even if you are considered to be a high-risk driver.
One is to shop around for the best rates, insurance companies all use different criteria to assess risk, so it’s important to compare quotes from several companies before you decide on a policy. Another way to save on your rates is to take advantage of discounts.
Know The Difference Between Comprehensive and Collision Coverage
Not all auto insurance is created equal and there are a lot of different types of coverage that you can get for your vehicle. Two of the most common types of coverage are comprehensive and collision. So, what’s the difference between the two?
Comprehensive Coverage: This type of coverage will protect you from damages that are not caused by collision. This can include things like fire, theft, or weather damage.
Collision Coverage: As you might have guessed, collision coverage protects you from damages that are caused by collisions. This can include things like hitting another vehicle or object or even rolling your own vehicle over.
A More Expensive Car Doesn’t Always Mean More Expensive Insurance
You might think that insuring a more expensive car would be more expensive than insuring a cheaper model, but that’s not always the case. In fact, sometimes it’s actually less expensive to insure a more expensive car. This is because pricier cars tend to have better safety features and are less likely to be stolen. So, if you’re looking to save money on your auto insurance, it’s worth considering a more expensive car. Just make sure you do your homework first so you know exactly what you’re getting yourself into.
Personal Insurance Doesn’t Cover Business Use
Most people are unaware that their personal auto insurance policy will not cover them if they use their vehicle for business purposes. If you’re using your car to make money, whether it’s driving for a ride-sharing service or delivering pizzas, you need to have commercial auto insurance.
This type of policy is designed to protect business owners in the event of an accident, and it typically covers a higher amount of damages than a personal policy. If you’re not sure whether your current policy covers business use, check with your insurance agent to be sure.
If You Lend Someone Your Car You Are Lending Your Insurance Too
Most people are unaware that if they lend their car to someone, they are also lending their insurance. This means that if the person who borrowed your car gets into an accident, your insurance will be the one footing the bill. To avoid this, make sure you only lend your car to people who you know have good insurance themselves. Otherwise, you may be liable for a large sum of money.
Another thing to keep in mind is that your insurance will not cover you if you use your car for business purposes. If you drive for Uber or Lyft, for example, your personal insurance will not cover any accidents that occur while you are working.
Don’t Let Your Insurance Lapse
If you let your insurance lapse, you may be required to pay a higher premium when you restart your coverage. Insurance companies view lapsed coverage as a sign of risk. They may also refuse to renew your policy or issue a new one. If you’re caught driving without insurance, you could face penalties from your state, including fines and the loss of your license. So, it’s important to maintain continuous coverage, even if it means making some sacrifices elsewhere in your budget.
These are just a few of the things you need to know about auto insurance. While it may seem like a lot to keep track of, it’s important to be informed so that you can make the best decisions for your needs. With a little bit of research and careful planning, you can find the perfect policy for you.