8 Facts You Should Know About Auto Insurance

8 Facts You Should Know About Car Insurance

Before you start buying auto insurance, you should know that it is certainly a risky business. There are many ways your insurance company can fool you and make you pay more than you owe. Here are nine things you should know before getting that car insurance.

1. Know Your Coverage Options

There several types of coverage options to choose from. Based on your situation, choose the one that suits you best.

  • Liability insurance: the minimum that each driver must have. It is mandatory in all states (except in New Hampshire). It covers the injuries and property of the other driver in case the collision is your fault.
  • Collision insurance: covers your vehicle no matter whose fault it is.
  • Personal injury insurance (PIP): it covers you and your passengers regardless of whose fault it was.
  • Comprehensive insurance: covers damage caused by natural disasters such as floods, hurricanes and other non-collision events such as fire and theft.
  • Uninsured / underinsured motorist coverage (UI / UIM): covers you and your vehicle against accidents caused by someone without insurance.

2. What Defines Your Insurance

Insurance policies are different for various companies and states. Most insurance companies consider driving history, gender, location (zip code), age, vehicle brand, model, vehicle use, prior insurance history and marital status. Also, keep in mind that 90% of car insurance companies consider your credit scores to calculate the premium.

3. A Reason For Denial

There is a good chance that the insurance company will deny coverage to you and your property. In such cases, however, you have the right to know why they rejected your insurance application. Most state laws require an insurance company to educate the insured about the reasons for cancellation. In addition, while requesting insurance, no company can deny it only because another insurer has rejected it once. Once you receive an explanation and still feel that there has been an error, you can correct your request and reapply.

4. Notice Of Cancellation

If your insurance company decides to cancel or not renew your policy, they must send you a written notice of the reason. However, the period varies from state to state. For example, while Massachusetts requires a 20-day notice, Texas only requires ten days. If you think there has been an error, you can appeal against cancellation. In addition, once you receive a cancellation, you must obtain a new policy as soon as possible. According to consumer analyst, Penny Gusner, “a span of just one day can result in a penalty, and a span will generally make your rates go up.”

5. Anytime Cancellation

You own the right to terminate your policy anytime. You can compare insurance quotes and, if you find something better than your current insurer, you are free to cancel. Also, keep in mind that you are entitled to receive a refund of any unused premium.

However, insurers may charge a fine if you cancel before the due date.

6. About Tickets And Insurance Rates

Always ensure to ask your insurance company about their surcharge program. The schedule highlights the offenses that add up and increase their rates. Research or consult with an insurance agent about the schedule and know what to consider. While small tickets such as parking, crimes without movement, equipment, etc. won’t affect your rates, some tickets do affect your insurance premium rates and might land you in trouble.

7. Non-Renewal Criteria

Before enrolling for auto insurance from a company, make sure you know their guidelines for non-renewal. Note that, these guidelines are not fixed. They vary by state and company. Here are some cases where renewal is needed:

  • Too many accidents within a certain time,
  • Too many traffic offenses, suspension or revocation of the license,
  • Conviction for leaving the crime scene
  • Insurance fraud

8. Your Budget

Once you know all the risks involved in car insurance, you should ask yourself an important question: how much can you afford to pay? Insurance is mandatory by law and not having one would penalize you. However, you can choose a policy that suits your situation and pocket.

There are several aspects to buy insurance, and the most important of all is your budget. Since it is mandatory by law, you should make sure you buy insurance that will protect you without burning a hole in your pocket. After all, you should also enjoy your trip. That’s why you need insurance first.

To get the cheapest auto insurance quotes from top brands call 888-871-8890 now.

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