After taxes and the addition of the most basic of options, today’s entry-level new automobile can easily cost more than $20,000. If you’re involved in an accident, you’re facing thousands of dollars-sometimes tens or hundreds of thousands of dollars-in liability, in health-care and property costs if you’re ruled negligent behind the wheel. Is that the kind of cash you have on hand? Those who risk driving without insurance not only risk immediate financial ruin, but they endanger their credit rating, which gets noticed by lenders and future employers. Auto insurance isn’t just about being able to fix a few dings on the car.
What Auto Insurance Costs
The cost of auto insurance varies based on your gender, age, where you live, what you drive, your existing credit rating, and your accident record. It also varies significantly by carrier, so you need to check with several types of insurance companies on comparable coverage before you make a choice. There really is no national average for pricing on auto insurance, but experts maintain that six-month premiums between various carriers can vary widely.
How best to check? About a month before your next premium bill is due, gather the names of insurers suggested to you by friends and relatives. Make it a mix of major carriers as well as high-quality smaller carriers. You can go to A.M. Best’s Web site (www.ambest.com) to check out the ratings on the various carriers you choose-Best rates insurers on their financial strength, which is a good indicator of their ability to pay claims.
Check with your state insurance department to find out if any of the carriers on your list have had regulatory problems-it’s a good indicator of whether they respond to customers and pay warranted claims. And here’s one more important tip-check all these details before you buy your dream car.
What you’ll pay is linked to the following:
- The make and model of the car you’re driving. If you’re buying or leasing a particular automobile, check the rates first-SUVs, convertibles, and other performance cars typically cost more to insure. Of course, you might find a wide range of rates within certain model categories, so that’s another good reason to widen your selection of vehicles before you buy.
- Your age. Adult drivers with clean driving records generally pay less than people in their teens and twenties.
- Your gender. Until the age of 25, there is a wide disparity between what males and females will pay, as most parents know. A female teen driver may add 50 percent to a family’s annual auto premium, but an under-25 male driver may easily double the family’s premium. Why? Young males generally have worse driving records than young females.
- Where you live. Higher-crime areas boost premiums for all insured property-cars, homes, and businesses.
- Safety devices on the vehicle. If your car has anti-lock brakes, side and front air bags, automatic seat belts, and plenty of safety lights on the car, that has the potential to lower your premium driving record. If you’ve had frequent tickets, particularly for moving violations, alcohol-related offenses, or other driving-related run-ins with the law, that will add to what you pay if a carrier agrees to insure you at all.
- Your claims history. Frequent claims raise your premium, period.
- Most people drive around with dings because fixing them will ding their insurance rates.
- Security issues. Anti-theft devices will cut dollars off your premium, as will a commitment to parking in a locked garage or other safe area.
- Your deductible. One of the few things you can directly control. If you pay a higher deductible, you’ll get a lower premium. However, you need to make sure you can afford to pay the deductible if a loss happens.
What Your Policy Covers
Your auto policy covers two things: liability and property damage. Here’s what that means:
Liability coverage. Most policies cover bodily injury, property damage, and uninsured/under-insured motorists. They might claim medical expenses, lost wages, and pain and suffering. Liability for property damage coverage pays for any damage you cause to other people’s property. This not only includes other vehicles, but stationary property like walls, fences, and equipment. Meanwhile, uninsured motorists coverage protects you if you’re injured in a hit-and-run or by an uninsured driver.
Property damage coverage. This is apart from property liability coverage. This coverage is generally not required by law, but if you have an outstanding auto loan, your lender might require it. 1f you have an older car, insurers might “total” it rather than pay the full value of the repair because that cost may exceed the actual worth of the car.
If You’re a Divorced Parent With a Teen Driver:
You and your ex need to coordinate auto insurance coverage before your child gets his driver’s permit. in most cases, experts advise the parent who has the child in residence for the most time to add the child to his policy. However, if the living situation is split into large chunks of time in different municipalities. each parent might want to add the child to his or her policy during the relevant time frame.
- It might make the most sense to discuss this issue with an expert to make sure you both get the best deal on coverage with no danger of lapses.
- If you’re caught letting your teen drive without coverage, you’ll risk losing your own insurance.
- You might want to consider additional liability coverage in case-an accident happens with a full car.
- Make sure your child takes a drivers’ training course and keeps his or her grades up. Kids with good grades are generally considered more responsible and more likely to be safer behind the wheel. You’ll get a discount for that.
- Choose that family sedan with the extra airbags. ff you’re going to insure a teenager on the family policy, make sure you do it on a car with the best safety rating you can afford.
- Talk to your kid about safe driving. You talk to your children about the dangers of drugs, alcohol, and sex-make sure you’ve added this important issue to the list.
- Lead by example. lf you haven’t figured this out already, your kids watch everything you do. If you cut corners on the road, chances arc excellent they’ll do so as well.