Understanding The Legalities And Jargon Of Auto Insurance

Auto insurance is not really an exciting subject, but it is highly necessary. It is a financial safeguard that will allow your car to be repaired and injuries to be covered, in the case of an accident, whether it was your fault or someone else’s. This is also why car insurance is mandatory across the country.

“Around 1925 Massachusetts and Connecticut became the first two states to write compulsory car insurance laws, in effect creating a pooled solution to help cover the costs of at-fault drivers so they wouldn’t default on their payouts. Since then, nearly every state in the union has enacted mandatory car insurance liability laws.”

However, because auto insurance is mandated at the state level, there is no one single rule that applies everywhere. There are, in effect, 50 different rules. And none of those are explained very clearly! Let’s take a look at what is there to know about insurance.

What Is Auto Insurance?

There is a surprisingly large number of people who really don’t understand auto insurance, nor why they really need it. The reason for this is probably because insurance is something intangible. Furthermore, many people end up never having to rely on their insurance, which makes it hard to really understand its value. So first, you have to understand what is auto or car insurance.

“Car insurance can pay to repair your vehicle after an accident depending on what coverage you select. A vehicle is often a major expense and you want to protect it. Comprehensive and collision each offers coverage for physical damage, which comes with a lot of rules regarding what is covered and what is not.”

What this means is that you pay a company – the insurer – and if you have an accident with your car, they pay for the expenses, which actually come from the money that have been paid in premiums. Why you need it is clear: a damaged vehicle and other damages to property require a huge expense, as are medical expenses.

Different Types of Auto Insurance

There are different elements to every auto insurance policy. One such element is liability insurance.

“If you cause an accident, liability coverage helps pay for the other person’s expenses. There are two types of auto liability coverage that drivers in each state must have: bodily injury liability coverage and property damage liability coverage.”

There are a number of so-called “no-fault” states. Here, you have to also have Personal Injury Protection (PIP), which will cover your own injuries and is irrespective of who was at fault for the accident.

Then, there is the element of collision coverage, as well as comprehensive coverage, which looks at flooding, fire, theft, and others. The term “full coverage” describes auto insurance in which all of these different elements are included.

There are also some option extras, such as:

• Uninsured motorist coverage
• Medical payments coverage

How to Obtain Auto Insurance

There are lots of ways to get a good deal on car insurance. You could, for instance, walk into an insurance agent’s office, or you could call up different companies. However, the easiest way to get a good deal is to use a price comparison website.

“Your searching spectrum gets limited to your own laptop or PC while you’re checking out a few online options. At the same time, you have the opportunity of checking a long list of online options with a few clicks of the mouse. You find more options to stick to your budget while checking out all online options and pricing at once.”

It may be tempting for you to go straight to the insurance company whose name you have heard before. However, the reason why those companies may sound familiar to you is usually not because they are the best ones, but rather because they have spent the most money on advertising.

Online Auto Insurance Tools And How To Use Them Properly

Almost everything is done online nowadays, and for the most part, this is advantageous. For instance, you can now compare the prices of just about anything online, including auto insurance. The advantages of price comparison websites are very clear to most people.

“Rather than individually visiting the hundreds of different car insurance sites, you can get insurance quotes from a price comparison website. You can save money on online car insurance when you know where to look for the best deals.”

These websites are linked to numerous auto insurance providers and it means that your details are submitted to all of them, saving you a great deal of time. You will then be presented with all the policies that are available, enabling you to choose the one that is most relevant for you.

That said, there are a number of disadvantages of using these sites as well.

“Not all companies are on price comparison websites, meaning you could be missing out on a quote from one of the more reliable companies or even the market-leaders in a particular type of insurance.”

Another downside is that there may be some skewing of prices. Also, comparison websites, sometimes charge a commission on any policy they offer. What this means is that you have to learn how to use these sites to your advantage. This starts by understanding how they work, which is by looking at the details that you provide on their search form. So long as those details are complete and accurate, you should be able to find some good deals. You can do this by following just two steps, in fact.

1. Complete the ZIP Code

First of all, when you shop for auto insurance, location is very important.

“Generally, due to higher rates of vandalism, theft, and crashes, urban drivers pay more for car insurance than do those in small towns or rural areas.”

Your exact ZIP code is important, but so is your state, county, and city. This is why your preliminary search should be on ZIP code. If nothing else, this will give you an indication of which price comparison websites to use, as some of them only cover specific geographical regions.

2. Complete the Rest of the Form

Once you have done the ZIP code search and you know which price comparison sites to focus on, you need to complete the rest of the form. This will ask you for details about yourself, the vehicle you are considering, your driving experience, and so on. You can often customize your search, so that you are shown results that are most relevant to you. Those details are stored on the online database, which means you can use them again at a later stage.

Once you have provided all those details, the broker’s algorithms will get to work on finding the different policies that are out there, what their prices are, and which plan is most suitable to you. It will provide you with all the relevant information, enabling you to pick the one that you like.

Now, it is true that you may end up paying a little bit more by comparing your prices through such a website. After all, they have to make some money somehow, which is usually by charging commission. However, you have the option of then navigating to the insurance carrier recommended to you, and requesting a direct quotation from them. Most of the time, you will find that the price you are quoted is exactly the same as the one you saw on the original website. This is because insurance companies give up on some profits in return for more customers.