A Beginner's Guide to Auto Insurance

If you've just bought a new car, the temptation is to get the first auto insurance quote that comes your way so you can get on the road as soon as possible. This is definitely a situation where the phrase "haste makes waste" applies. No matter how desperate you are to get your new wheels on the road, you should take some time to shop around for the auto insurance that is the most appropriate and affordable for you. New drivers, especially, don't realize that they may be eligible for discounts on their auto insurance premiums.

First of all you need to know that you cannot drive your car at all before you purchase what is called "third party auto insurance." Third party auto insurance is the cheapest type of insurance that you can acquire and is also required by law. However, third party auto insurance will not cover you if you find yourself to be the victim of theft or if your car suddenly catches on fire on the highway.

Third party auto insurance only covers the costs of damage to another driver's vehicle. If you want to cover every eventuality and risk to your car and your own safety, then you will have to purchase what is called comprehensive auto insurance coverage. Comprehensive auto insurance coverage covers theft, damage, personal injury and any damage caused by your car to anybody else's property or vehicle.

Keep in mind that most auto insurance companies offer similar rates for third party or comprehensive coverage. What makes some companies a better deal than others are the "perks" and additional services they offer at comparable rates. When shopping around for auto insurance, try to look for such extras as "after-sales services", the offer of a courtesy car to use while your car is in the shop and 24-hour customer support.

When looking at the cost of the auto insurance you might also want to consider the company's payment plan. Life is definitely easier if you are allowed to pay the insurance in monthly installments!

The cost of your insurance can depend on several factors. The first thing that the auto insurance will assess is the model of car that you own. Insurance companies assign each type of vehicle to a category of vehicles that share similar design flaws and risk factors. Then the car is rated. If your car is rated a 1, then it means you will be offered a lower rate. If it is rated 20, then the car is considered to be more of a risk by the auto insurance company.

The more safety and theft-deterrent features your car has, the lower your auto insurance will be. However if your car boasts all kinds of trim and extra fittings this can raise the cost of your auto insurance.

To determine the cost of your policy, the auto insurance company will also take other factors into consideration such as whether or not your car is kept in a locked garage overnight and whether or not you live in a city. City residents are more vulnerable to theft; vandalism and they also have a higher risk of damage.

Age and occupation are other factors that can affect the cost of your policy. In general young motorists face higher auto insurance costs as do people with jobs that are considered to be high-risk such like sports professionals, bar workers and construction workers

Finally, the prices of spare parts and servicing damaged vehicles play a major role when it comes to determining how much an auto insurance premium should cost, because nearly 75% of money paid out to auto insurance claims is for repairs.

The auto insurance company will also take into account how many claims you have filed in the past. If you have been accident-free for one year, most auto insurance companies will offer you a discount on your premium of about 30%. Keeping accident free for five or six years will grant you an auto insurance discount of 60% or more.

Some auto-insurance companies offer discounts on premiums for drivers over 50 years of age. Similar discounts are offered to individuals who have had driver training courses and for students who have good grades. Many will also offer auto insurance discounts for those who have insured a car with them before, or who have more than one car insured with the same company.

As there is so much to consider when it comes to buying auto insurance it is important to shop around first so that you get the best deal possible. Whatever you do, don't attempt to drive your brand new car without auto insurance. Not only is it foolhardy it is also against the law.

 

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