Auto insurance may seem like a confusing and complex topic for someone who never used this service. If you're novice to the whole concept of auto insurance this can certainly be a bit hard since you're also under pressure of driving your first car. But don't worry, since auto insurance isn't that hard to comprehend. You only have to learn the basics of it and the rest will be much easier to understand and won't cause any confusion. So what are the essential things you have to learn when buying your first auto insurance policy?
Coverage is what you get with your policy when buying it. There are many different types of coverage that you can include to your policy, each designed for covering specific situations. However, there's only one type of coverage that is actually mandatory according to law – third party liability, which pays out to the other party involved in an accident in case you were at fault. All other coverage types are optional and you can include or exclude them as you wish. Just keep in mind that the more coverage you get the more expensive your policy will be.
Premiums are the periodic payments you have to make to keep your policy valid. Premiums are mostly determined by the amount of coverage you choose to get as well as many other factors such as the car make and model you drive, your place of residence, age, sex, education, driving record, credit score and many others. Premiums are usually paid once a year when renewal date comes and may range significantly from company to company and depending on your current coverage set.
Deductible is the amount of money to be paid out of own pocket before the coverage starts to apply. It is usually set to a very low level such as $100 or $250 and intended to protect the company from minor claims. However, if you set the amount of deductible higher your premiums will decrease since there will be a lower probability for the company to receive a claim form you. Only make sure to set a reasonable amount since there's no sense in having an auto insurance policy that's forcing you to cover all the damage out of own pocket.
Auto insurance quotes serve the role of price tags in the domain of insurance. The only difference is that each quote is calculated for a particular customer based on different factors. Auto insurance quotes are essential for effective comparison shopping because they allow you to learn the cost of the policy before buying it. By comparing auto insurance quotes you can find a competitively priced policy because all companies tend to use different methods for calculating their premiums and you will hardly find two identically priced policies from two different companies.