|Carl’s Corner – Auto Repair Help|
AUTOMOTIVE INSURANCE BASICS
BUY AUTO INSURANCE?
HAS AUTO INSURANCE BECOME SO EXPENSIVE?
Another reason auto insurance premiums are so high is the fact that so many people are driving without insurance. How is this you ask? Well, it manifests itself in two ways. First, many people opt to get “uninsured motorist” coverage which of course costs them extra. These people are protecting themselves from those who do not have insurance. So in a sense, they are paying in part for someone else’s insurance in terms of coverage to themselves when the other party is at fault. The extra cost of uninsured motorist insurance would of course be unnecessary if everyone had insurance (i.e. there would be no uninsured motorist). Second, those drivers without insurance do not contribute any money to the insurance system yet they can take from the system if they are in an accident with an insured driver who is at fault. This is because the insured driver’s liability coverage will pay for vehicle repairs and any medical expenses for the “victim”. Insurance companies are well aware of this fact and make up for it by passing this cost onto those who have insurance policies.
OF AUTO INSURANCE COVERAGE
Property damage liability – In the event that you cause an accident, this will pay, up to the amount of your coverage, the expense to repair the damage you have done to someone’s vehicle and/or any other property which may have been damaged in the accident.
Bodily injury liability – In the event that you cause an accident, this will pay, up to the amount of your coverage, the medical costs of the accident victims.
Medical payments – In the event that you are in an accident (regardless of who is at fault), this will pay, up to the amount of your coverage, your medical expenses and the medical expenses of any passengers in your vehicle.
Uninsured motorist – In the event that you are in an accident (but not at fault) either with someone uninsured or a hit-and-run driver, this will pay, up to the amount of your coverage, your medical expenses and the medical expenses of any passengers in your vehicle.
Collision – In the event that you are in an accident (regardless of who is at fault), this will pay, up to the amount of your coverage, the expense to repair your vehicle. Note that for collision coverage there is a deductible. Also note that if your vehicle is totaled, the insurance company will only pay you the blue book value of the vehicle.
Comprehensive – In the event that your vehicle is damaged by fire, vandalism, natural disaster, or it is stolen, this will pay, up to the amount of your coverage, the expense to repair/replace your vehicle. Note that for comprehensive coverage there is a deductible. Also note that in the event your vehicle is either totaled or not recovered from being stolen, insurance companies will only pay you the blue book value of the vehicle.
If some of these coverage items are confusing or seem to overlap, by all means consult with an insurance agent for a thorough explanation and discussion of various case scenarios.
Driving record – Probably more than any other factor, one’s driving record is weighed heaviest by an insurance company when determining a premium. Those with spotless records (i.e. no tickets or accidents) will be rewarded with lower premiums. On the other hand, those with poor records will pay a higher premium because they are a higher risk. If one’s driving record becomes extremely poor, most insurance companies will drop the policy holder since the risk is too high.
Age of driver – Insurance companies charge younger drivers the most. Specifically, those under the age of 25 will typically pay the highest premiums. Why? Because younger drivers tend to be “wilder” in their lifestyles and thus driving. As the driver gets older, he/she tends to stabilize and consequently, their rates are lowered.
Type of vehicle – Owners of sports cars will pay much more than owners of sedans. Why? Because insurance companies are aware that those who drive sports cars are more likely to get in an accident because of the mentality that comes with owning a sports car. In other words, they tend to drive fast and often reckless.
Theft rating of vehicle – The more desirable a particular vehicle is in the eyes of a car thief, the more you will pay in the form of comprehensive coverage.
Bumper rating of vehicle – The more effective a vehicle’s bumpers are, the less damage the vehicle will have in the event of a low speed collision. Some insurance companies have a slight surcharge for vehicles with poorly designed bumpers. For example, according to tests conducted by the Insurance Institute for Highway Safety, a 2004 Toyota Corolla had $2500.00 in damage after a 5 MPH rear collision whereas a 2004 Ford Explorer had no damage in a similar 5 MPH collision.
Where you drive – Those who drive mainly in the city will most likely pay more than those who drive in rural areas. Why? Because when driving in the city you are “exposed” to many more potential accidents simply because the conditions are busier. Also, there is always a higher chance of theft and vandalism in the city.
How much you drive – Those who drive more than the average annual mileage for their particular area will likely pay a higher premium. Why? Because the more you drive, the more you will be “exposed” to a potential accident simply because you are on the road more.
Increase your deductible from $250.00 to $500.00. This can reduce your premium by 20% and if you can drive accident free for a couple years, the savings will be enough to pay the higher deductible for any future accident.
If you generally drive alone and have excellent medical insurance through your employer, consider reducing your auto medical coverage to the minimum. There is no reason to have double coverage.
If you have an older/low valued vehicle, consider skipping collision and comprehensive. In general, these coverages are not cost effective for vehicles worth say only, a couple thousand dollars.
Maintain a driving record free of accidents and moving violations.
If you’re involved in a minor accident and there are no apparent injuries, try to settle the matter with the other party without police involvement and without contacting either parties insurance company. This will keep your driving record clean and will not give the insurance company an opportunity to raise your premium.
Buy a vehicle with air bags, anti-lock brakes, and automatic seat belts. Many insurance companies will offer discounts on vehicles equipped with such life saving devices.
Get an alarm system for your vehicle. Some insurance companies offer discounts for various anti-theft devices.
If you are a student, keep those grades up! Many insurance companies give discounts for students who maintain at least a “B” average. Their reasoning is that better students are typically better drivers.
If you’re single but are getting married, ask your insurance company if you’ll receive a discount with your new status. Many insurance companies do reward married drivers as they see them as being more stable and less likely to drive recklessly.
the other driver’s name, license plate number, driver’s license number,
and name of insurance company.