How to select the ideal Auto Insurance Plan

0
762

Auto insurance is one of the most important financial products you can buy, and that’s not just because you are required to have it. The likelihood of an American getting into at least one car accident at some point during their lifetime is high enough that most people will need to file a claim with their insurer during their driving career. At the same time, though, auto insurance can be fairly expensive. All of this adds up to mean that finding the right balance of premium, deductible, and coverage in your plan is crucial.
The first thing to understand when it comes to auto insurance plans is that auto insurance carriers love to reward careful drivers. They are always looking for ways to find safe drivers and reward them. Most major carriers have some kind of safe driving bonus. This takes different forms depending on the company, but the net result is usually that the fewer accidents you get into, the better deal you get. This usually includes a clause that forces you to maintain a clean sheet for a certain number of years to get the bonus. If you can keep accidents off your record, then you can max out this bonus no matter which carrier you have.
In terms of plans, you have a few choices to make. The first is what kind of coverage you want. There are several different categories of expenses that can arise from a car accident, and they are divided up in different ways. For example, it is possible to distinguish between coverage for yourself and coverage for other drivers or people involved in accidents with you. You can also separate coverage for people with coverage of damage to property. It is even possible to buy coverage specifically to cover the risk of experiencing an accident with an underinsured motorist. Most US states set their own minimums for how much coverage you need to have. That should be your baseline for an acceptable policy. Look up what your state requires and then determine how comfortable you are with that level of risk. Keep in mind that auto insurance also covers events like car theft, not just accidents. Essentially any risk that is related to cars and driving falls under auto insurance. “The more coverage you want, the more you have to pay each month in premiums,” according to AALL Insurance. That applies to both the level of coverage, meaning how much the insurance company will cover, as well as the diversity of categories of insurance.
Insurance decisions also depend on the availability of different policies. Each carrier has their own array of options and not all carriers have plans in all areas. This is particularly true for cities. Cities tend to be riskier places to own cars. You are more likely to get into an accident due to the greater congestion and number of intersections. There is also the risk of damage from cars parked on the street being sideswiped, and there is more car-related crime and vandalism. All of this adds up to say that cars are more expensive to insure in dense cities than other regions. Rates will be higher and you might want more coverage to account for the fact that you are more likely to have an accident. That means you probably will not be interested in the lowest tier of plans if you have the budget to afford more coverage. It’s a difficult decision to make, because you have to balance the unknown risk of a car problem with the certain pain of making a monthly payment.
In the end, no car company knows you as well as you know yourself and your riskiness. However, some are trying. A few carriers, most notably Progressive, are trying to research how you drive in order to decide if you are a safe driver or not. They provide you with a device that you plug into the car dashboard. The device then records how fast you go, how quickly you brake and accelerate, how sharply you turn, and so on. Based on that data, the insurance company decides if your driving habits are safe or risky and gives you a discount in accordance with how safe you are. The safer you are, the bigger discount you get. If you really are a safer driver, these plans help you cash in even more.
The bottom line is that insurance is highly personal because driving habits are so individual. You need to think carefully about how much insurance you need and what you expect to happen in your car. Don’t be afraid to get a little too much insurance. Paying a few dollars extra per month is a lot better than being left with a big bill after an accident.