What are the factors that affect car insurance premiums?

There are many factors which can affect the cost of your car insurance premium. Having a basic knowledge of them will help you to reduce the cost of premium at the time of purchase or renewal. The factors that can affect car insurance are car registration location, car model, manufacturer and variant type, safety and anti-theft security in cars, type of policy and add-ons, etc.

Does my vehicle affect my car insurance rates?

Yes, obviously. The make, model, variant and fuel type of your car affect the insurance rates. Here, the cost of your car plays a significant role, the more it costs to repair or replace and the more you will pay to insure it. If you have chosen a car, consider it's variant and insurance premium cost respectively. Generally, the higher you go in the car's trim list, the lower goes the difference in insurance premium cost. Because higher trims offer additional safety features like airbags, central locking, immobiliser, etc. which reduce the chance of insurance claim.

What are the coverage benefits of auto insurance?

Auto insurance coverage includes medical payments, liability, personal injury protection (pip), comprehensive, collision, commercial (business) auto insurance and underinsured and uninsured motorist. There may also be add-ons like entitlement to a free rental car while your car is being repaired or replaced, emergency roadside assistance, etc.

Do I need personal injury protection (PIP) or medical payments if I have health insurance?

If you have sufficient health insurance to cover any medical bills resulting from an accident, then you have to determine if PIP or medical payment coverage is worth purchasing. However, health insurance might cover your medical bills but it would not cover the medical expenses of passengers in your car. Also, it would not offer the additional coverage that PIP provides such as funeral expenses, loss of wages etc.

What is not covered in auto insurance?

The exclusions are pre-decided by the insurance company and are mentioned in your policy documents. Exclusions are nothing but the types of expenses which would not be covered by your insurance policy. Exclusions differ from plan to plan, insurer to insurer, but there are some general expenses which are not covered in auto insurance such as mechanical or electrical breakdowns, wear and tear, failures or breakages, consequential losses or damages and depreciation.

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Auto Insurance Isn't Easy, Let's Fix That ...

Luckily, you have come to the right place to learn what you need to know before you make your purchase. Learn the basics of auto insurance from SheerQuote so you can get the right coverage for the best price.

Let's Go Over The Basics

What is Auto Insurance?

Personal Injury Protection

Also known as PIP, personal injury protection covers any medical costs that may be incurred by you or your passengers as a result of an accident. PIP is required in some states and optional in others.

Uninsured / Underinsured Motorist

In a perfect world, everyone would have more than enough car insurance. However, we don’t live in a perfect world. Therefore, you are at risk of being stuck with a major bill if you are hit by a driver who has no insurance (uninsured) or not enough insurance to cover the costs (underinsured). Uninsured and Underinsured Motorist coverage protects you against that risk.

Collision

When you have collision coverage, you receive money to repair or replace your car if you’re involved in an accident—even if the accident is your fault. Most policies require you to pay a specified sum of money toward the repairs first, which is called the “deductible.” Once you’ve met the deductible, the insurance company pays for the rest of the damages.

Comprehensive

Comprehensive coverage is called “comprehensive” because it applies to anything that might happen to your car other than an accident—theft, vandalism, falling rocks or branches, storm damage, flood damage, and more

Liability

Liability coverage pays for damages that occur in an accident when you are at fault. Importantly, this includes both medical and property costs, and it includes damages suffered by both you and any other parties involved in the accident. Liability insurance is critical because it protects you from lawsuits if you are sued after an accident.

Mistakes You Should Avoid

1. Not Shopping Around

Insurance buying is a lot like car buying. You have to shop around to find the best deal. One licensed insurance agent may be able to get you free quotes from several companies, or you can be your own advocate and research different companies and policies online.

You want to start shopping well before you need to buy insurance so that you don’t have to choose a policy just because there isn’t time to research all of the options that may be available. In some states, you can’t leave the dealership with a new car unless you can show that you have car insurance. Most lenders require that you have insurance on any vehicle that they have loaned money on.

2. Not Making an Apples-to-Apples Comparison

The biggest challenge in comparing quotes is ensuring that you are making apples-to-apples comparisons. Make sure you are looking at each component of the policy separately, and make sure that each quote has the same deductible and coverage level for each element.

Every policy should have bodily injury liability, property damage liability, and uninsured/underinsured motorist coverage.

Other coverages include comprehensive insurance, which covers your car in case of theft, vandalism, vehicle fires, or natural disasters like hailstorms or falling trees. Collision insurance pays for repairing your vehicle if it is involved in a collision with another motorist or object.

Medical payments coverage pays for costs incurred from injuries to your passengers, while personal injury protection (PIP) covers your medical expenses. Sometimes your medical insurance will not cover injuries sustained in an auto accident.

3. Not Understanding Your Needs

Every state has different statutory limits on what insurance you must have and in what amount. Those limits, however, are just the minimum of what you should have. Different policyholders need different amounts of insurance, and finding the right balance of cost and coverage is critical to saving money.

If, for example, you have a 10-year-old subcompact car, you probably don’t need to spend a lot of money on comprehensive insurance. If you are a public figure or might be seen as someone with deep pockets, you should consider significantly higher liability coverages, plus an excess liability (umbrella) insurance policy.

If you are unsure of what coverages you need, it is probably best to consult with a licensed insurance agent when you are first shopping for a policy. If you want to consider other companies at renewal time, you’ll have a good idea of the types and levels of insurance you need.

4. Not Considering Online Insurance Companies

Unless you have complex insurance needs that require one-on-one counseling with a licensed insurance agent, you might be able to take advantage of online insurance companies that save money by not having brick and mortar locations or independent agents that they have to pay commissions to.

Even if you can’t bring yourself to use a company that doesn’t have physical locations, you can go to many traditional insurance company’s websites to seek quotes and comparison shop. When you buy car insurance online, be sure to be accurate with any documents that you fill out. You won’t have a licensed insurance agent to double-check the forms.

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