Information about auto insurance companies and coverage options are available from multiple sources for examples the state’s department of insurance, magazines, and independent reviewers’ websites. Insurers operate within the scope of state’s regulations, so everyone will get more or less the same suggestions. There are laws that govern how insurance companies conduct their businesses. There is a clear boundary between legal and illegal practices, but customers still need to do their due diligence to not only avoid frauds but also purchase the right insurance policy that contains the right coverage from the right company.
Insurers have their own methods to determine price and coverage. Apart from company’s policy, customers’ personal data and previous DMV records, behaviors on the road are also essential. Two people who have the same car model and make can get different quotes because they have different records and preferences as well. Here are some questions policyholders must ask themselves before they decide to purchase coverage from any provider.
1. How Much Do They Drive?
More mileage per policy period means more expensive premium. A person who drives a car every day of the week to commute spends more time on the road, hence higher risk of accidents. Distance between home and workplace also helps determine auto insurance premium. Therefore, someone who drives short distance should pay less for auto insurance coverage. Some companies provide discounts for low mileage, too.
2. Do They Use Their Cars for Commercial Purposes?
There are two types of auto insurance policy: personal and commercial. Personal auto insurance is for those who drive for personal purposes for examples to their workplaces or leisure travels. All types of coverage in the policy protect the safety of the drivers and cars. Commercial auto insurance provides more complete protections such as for cargo or passengers (who are not from the same household). Financial protection for cargo means more expensive premium, but this is necessary from business point of view.
3. Do They Have Any Emotional Attachment with Their Cars?
People who love their cars very much need the best protections available from providers. In addition to minimum coverage requirement by the state, optional coverage is necessary to protect cars from wide range of potential dangers. Collision, Comprehensive, and Road Assistance are not mandatory, but they must purchase such coverage for better protections. Additional coverage increases premium rate.
4. Does Anybody Else Drive the Car?
Other drivers (for examples spouse, children, or anybody who lives in the same household) must put their names in the policy. Additional drivers mean more expensive premium, but it can be cheaper when the other driver is a teenager. Insurance companies tend to think of young drivers as high-risk, so it is best to list their names as secondary drivers to minimize cost.
5. What Type of Cars Do They Drive?
Cars with minimum safety features cost more to insure. Sports cars or luxurious models are expensive to repair, and this is why auto insurance providers charge higher premium.
6. Do They Own or Lease the Cars?
Full ownership of the car grants the right to choose any combination of insurance coverage available from provider. When the car is still under lease or finance agreement, the financial service that leases the vehicle often requires driver to include specific type of coverage as part of the deal. In this case, total cost for insurance is almost always more expensive than the amount full owners have to pay.
7. Where Do They Park?
Policyholders’ address is also an important thing to consider. People who park their cars in urban areas where crime rate is high tend to pay higher for auto insurance. There is higher risk of theft and vandalism in the area, so additional protection is necessary. Car owners who live in suburbs often pay less.
8. Do They Have Any Traffic Violation History?
Traffic law violations in the past affect the current premium rate. Records of DUI, involvement in major accidents, improper turn, and failure to produce driver license or insurance card affect premium. When an insurance company thinks that a driver is too risky to insure, the driver needs non-standard auto insurance. The term “non-standard” refers to coverage for high-risk drivers.