Car Insurance -- Things You Should Understand

By buying a car insurance policy, you are entering into a contact with the insurance company. Under the contract, the insurance company agrees to pay your losses if your car meets with an accident. In exchange, you agree to pay the premium.

Car insurance covers property, liability and medical coverage. Property coverage pays for damage to or theft of your car. Your legal responsibility for bodily injury or property damage caused by your car is taken care of by liability coverage.

The cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses are taken care of by the medical coverage.

The validity of most car insurance policies is six months to one year. The policy must be renewed on expiration.

All states require you to have some form of car insurance if you own or operate a car.

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Different states have different penalties for driving a car without insurance. Some states impound your car. Some states impose heavy fines. You could be in serious trouble if you car is involved in an accident without insurance. You may have to comply with the financial responsibility laws including having to pay for any injuries or damages out of your own pocket.

Your credit history, the age and type of your car are also vital factors in determining the rate you have to pay for car insurance.

You are responsible for providing insurance for any car you own regardless of who is operating the car. If you operate a car without insurance, you will be in violating the law.

Finally, a few savings tips...

1. Getting married will bring down your rate by a huge margin. There is evidence to show that married people are a lot more stable than their unmarried counterparts. This makes them more careful on the road and, therefore, a better risk to insurers. Furthermore, as a group, their claims are usually less both in number and average cost per claim.

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2. "Pimping your ride" does NOT help if you want lower rates. Things like changing your tires to bigger ones than specified by the manufacturer, adding equipment that will increase your car's horse-power will cost you a lot more. So if you're really serious about keeping your rate down, leave your car the way it was manufactured.

3. Before you get carried away with the few hundreds you will save on a house, check if it will not cost you much more in auto insurance. Homes in the same neighborhood may fall under different risk zones as far as your insurer is concerned.

So check with your agent before you commit to a new home. The truth is that most people don't think about this when they are about buying a home.

But think about it: If your new zip code adds up to $300 to your annual auto insurance rate, how much would that amount to at the end of your 30-year mortgage?

4. Never leave your car unlocked and running while you dash in to get something. This is an open invitation to any thief sniffing around. Car thieves are known to go for easy targets. It certainly doesn't get easier for a thief than an unlocked car with a running engine.

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5. As an under twenty five, you can pay lower car insurance premiums if you use your parents' policy. If you're of driving age, then your parents certainly are far above 25 years which means they're lower risk drivers.

There are two things you must do for this to be possible: The vehicle must be registered in your parents' name and you must live with them. If you want to own your car, then be the big boy or girl and also own the higher rates. Sorry, you cannot have both with this alternative. However, you can still make huge savings by following the link at the end of this piece.

6. You'll save a lot if you do shop around and do thorough comparison. The range of quotes received for a request could be as wide as $1,000 for a particular person. Notwithstanding that this is a good thing, it's crucial that you don't get carried away. It's not normally that easy if you want the best price/value.

The lowest quote may not represent you the best price/value. Notwithstanding that each of the quotes returned will definitely give you the same basic coverage, there could be a number of differences in the details of coverage. This makes it important that you find out if there aren't any exclusions that won't serve your best interest.

Don't forget to treat these no-obligation quotes just that way. Don't feel obliged to pay until you've got all your questions answered to your satisfaction. You will prevent rude shocks later if you do this.
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