You’ve just bought a new car, and the last thing on your mind is calling the insurance company. You want to take it out for a spin, show it off to friends, and order customized license plates, not set up an expensive insurance plan and re-write your budget to include monthly payments that are always more than you want them to be.
Unfortunately, auto insurance is a necessary evil, and it comes with the pride and freedom of a new car.
So what do you need to know about car insurance? There’s a lot of information out there, but here are a few things you might not know.
How Much Does Insurance Cost?
Prices are going to range all across the board depending on a myriad of factors. What car you drive, how old it is, whether or not you have a driving record, your gender, age, where you live, how protected you want your car to be, and what insurance provider you use will all influence the cost of your insurance. But whether you look into car insurance in Halifax or Houston, one thing is going to stay the same: you have to have it. It’s not optional.
So what remains, then, is to find the cheapest option that will give you the coverage you want.
What are my Options?
If you’ve just bought your first car, you might not even know that you have insurance options. The minimum coverage that most states require is liability coverage, which is the cheapest and takes care of any damage done to other cars, property, or people for which you are to blame.
From there, insurance policies go up both in price and in the amount of damage they cover. What you pay for depends on how protected you want you and your car to be.
Collision Coverage will pay for damages sustained to your car during an accident, unlike liability that only pays for the other car (if the accident was your fault). If your car is totaled, collision insurance will pay the cost of your car. If your car is somewhat old, it might not be worth it to you to pay for collision because you’ll end up paying more in insurance than your car is worth. If you have a newer car, however, this might be a good option.
Comprehensive Coverage is for all accidental damage that doesn’t have to do with a collision with another car, such as when you hit an animal, your car is stolen, or your car is damaged by weather.
Uninsured Motorist Protection: Auto insurance is required by law, but that doesn’t mean that everyone is insured. If another car hits yours but the driver is not insured, this policy will pay for the damage done to your car since they cannot.
These are just a few types of coverage available to you; some states require more than others, and you may want to add extra insurance for newer vehicles. Just do your research and decide what you can afford…and what you can’t afford not to have.
What Makes my Insurance Rates Rise?
Unfortunately, it is much easier to raise your insurance rates than to lower them again once they’ve risen. Insurance companies don’t like to pay for people’s mistakes. If you’re an at-risk driver then you’re going to cost them more money, and therefore they will charge you more to compensate for your potential expenses.
Here is a short list of what might raise your insurance rates.
- Adding a teenage male driver to your insurance policy
- Turning 50 (older drivers are more at-risk)
- Having a bad credit score
- Getting in an accident
- Getting a ticket
- Being single
- Buying a newer car
- Driving more miles than usual (e.g. getting a new job with a longer commute)
How do I get a Good Deal?
There are a few things you can do to save money on car insurance besides staying young forever and avoiding accidents like the plague.
- Compare costs and companies. Don’t just go with the first company you find on Google. Do your research.
- Don’t pay towing insurance. Odds are you won’t need to be towed. If you do, the average tow job will cost you less than it would to pay insurance for it.
- Don’t pay a monthly bill. Many insurance companies will add an extra few dollars for monthly payments. If you can afford it, pay bi-annually or annually.
- Buy car and homeowners’ insurance from the same provider. Many companies offer package deals.
Wishing you didn’t have to know about insurance won’t make it go away, but knowing your stuff can save you a lot of stress and money. So do your research, learn your options, and enjoy your car despite and because of the insurance bills.
Melanie Hargrave is a wife and homemaker whose family is her pride and joy. She is an expert with the budget, and likes learning about how to save money from companies like Eisenhauer Insurance.