Auto insurance is meant to protect owners and operators of motor vehicles from financial loss. Cars, trucks, motorcycles, and other vehicles are big investments. In low to moderate median income communities, their value represents a substantial part of a family’s assets. Drivers should be covered against damage to their own vehicle and their medical expenses, and also against damage to other property and possible claims resulting from injury to others. To do its job, an insurance policy must address certain key elements.
Liability to others
As a matter of public policy, most jurisdictions require drivers to be covered by a minimum amount of liability insurance. Liability can include damage to someone else’s property, whether a vehicle or something else like a mailbox or a window. It can also include medical bills that are the result of an accident, and in some places even lost wages or other amounts. Some drivers choose to cover liability insurance well over the minimum.
Medical payments coverage is an auto insurance option that covers payment for bodily injuries due to an accident covered under the policy. These are usually injuries to persons in the policy holder’s car. This coverage usually has no limit but does have a cap on the total payout.
Costs to the driver
Financial loss resulting from damage to an automobile that is not the result of a collision can also be devastating. This includes a tree falling on the car, damage from a flying rock, or even hitting an animal. It also covers fire damage and theft. The cost of comprehensive insurance to cover these expenses depends on the level of deductible the policyholder chooses as well as other factors that influence the price of the policy as a whole. This type of auto insurance is optional in most places, but quite desirable for vehicles of any value.
Collision or accident insurance covers costs from damages to the policy holder’s vehicle that result from an auto accident. Like comprehensive insurance, collision coverage is optional in most jurisdictions, but it is a very good idea if the cost of replacing a vehicle would present a financial strain. Also, like comprehensive coverage, collision insurance costs vary according to many factors, one of which is the level of an auto insurance deductible that the purchaser selects.
Another possible problem for auto owners occurs when a relatively new car is totaled. Since the value of a new vehicle plummets as soon as it leaves the lot, the car may not be worth what is owed on it, and the payment may not equal the replacement cost. To protect owners from such situations, gap insurance covers the difference between the value of the vehicle and the amount remaining on the loan.
Choosing the right combination of auto insurance features means balancing several elements. Determining which is crucial to a driver’s particular situation and which would represent an extravagance involves careful thinking, followed by comparison shopping to find the most economical policy that includes the key elements required.
Car Insurance for Rural Drivers: The Pros and Cons
Historically, drivers living in rural areas have paid much less for car insurance than their urban counterparts. In fact, one of the biggest ways policyholders scam insurance companies is by using a rural address to register their city car and reaping the discounts that come along with a safer location. But how fair is this discrepancy? More and more research has emerged about how dangerous rural roads actually are, and many country areas have higher accident rates than cities. A recent study by road safety organization Brake found that 44 percent of men and 24 percent of women admit to speeding in rural areas, and a large percentage admit to illegal passing and even drunk driving on more isolated roads. Is a rural address the key to low insurance? Or will your driving habits to ruin your chance for a deal? There are advantages and disadvantages.
Why Rural Insurance is Cheaper
Most of the reasons why getting insured in the country are not as costly as city insurance are obvious. There’s not as much traffic. The lack of congested roads means there’s much less chance of an accident, but that’s only the beginning of an insurance company’s considerations. Rural areas also have less vandalism and theft, leading to fewer comprehensive claims. Even when rural residents do file car insurance claims, they usually cost less because of a reduced cost of labor, cheaper parts, and lower medical expenses. And best of all, country residents simply drive less – shorter commutes and easier access to local businesses mean an overall reduction in vehicle use, which always results in insurance discounts.
How Rural Drivers Could End Up Paying More
Several factors can negate or lessen the amount that rural residents save on car insurance, starting with the fact that many of them may drive higher-priced vehicles. Pickup trucks and SUVs can be more expensive to insure because their parts cost more to replace and they can cause extensive damage to smaller vehicles. There is also an increasing number of studies that show rural driving can be more dangerous. With less access to public transportation, there are a high number of younger drivers who take risks on the road. There is less adherence to seat belt laws and speed limits, and there’s a 2.5 higher chance of fatality in an auto accident, though that’s also a result of longer response times from emergency services who may be coming from the city. The threat of weather-related accidents, wild animals, and small, winding roads is ever-present.
What Drivers Should Know
How and why your zip code affects your car insurance rate can depend on the company and the area, and moving to the suburbs isn’t a guarantee for paying less. Insurance companies stress that your driving record is the number one thing that determines how much you pay, along with your credit score, age, gender, and vehicle make and model. Even if your rates go down based on a move, it’s important to remember every rural area is not created equally. Some have a high propensity for deer accidents, and others might have higher rates of insurance fraud – many factors go into determining an average premium. Plus, with the advent of the internet, it’s possible to compare quite a few companies and end up with wildly different quotes.
Is it better to drive in the country or the city? It all depends on you and your car. Auto insurance is the single biggest transportation cost families can face after gasoline, with the average low-income family paying nearly $1,000 per year. It can be tempting to break down these costs into every little variable, but no matter where you call home, it’s always about the big picture.
5 Advantages of Taking out Short-Term Car Insurance
You may not know this, but you don’t always need to pay for a full car insurance policy. If you only want to use your vehicle on occasion, taking out a short-term car insurance policy may well be the better option.
There are various advantages of temporary cover, so let’s quickly consider 5 of these now.
Naturally, taking out short-term car insurance is going to be more convenient for any driver who doesn’t use their vehicle very often. If you only drive your vehicle on occasion, there is absolutely no need for you to go and pay for a full policy that covers you for an entire year or even six months.
With short-term car insurance, you can take out cover on a car for as little as a day or (in some cases) as much as 28 days. And as most insurance firms can provide you with a policy online or over the phone, you can get out on the road in no time at all.
One of the best advantages of this type of insurance is that you will almost certainly save money. Paying for an entire policy for a year will cost you hundreds of pounds. However, if you only actually drive your car a dozen times, you’ll be wasting a great deal of money. As a result, purchasing short-term insurance will allow you to make significant savings throughout the year.
3. Pay as you go
As mentioned, you only need to pay for the insurance when you require it, so you can be very specific with your policy. If you plan on going on a road trip for one week, for example, you can cover yourself for this period.
Similarly, if your child is coming back from university for three weeks, and they want to use the car, purchase a policy to cover them for those three weeks only. Only paying for what you need is hugely beneficial and cost-effective.
4. Easy to buy
Getting your hands on a short-term car insurance policy is extremely simple, as you can purchase a policy at any time, day or night, and their coverage will kick in immediately.
Also, various websites will help you to compare and contrast the different policies available. This means that you can get a policy that is tailored to your personal needs.
Furthermore, there are online help forums that are full of potential insurance customers with similar questions to you. These forums provide a golden opportunity for prospective buyers to share their concerns and questions with other potential customers.
5. Can offer protection
Adding another driver onto your own long-term policy will put your no claims bonus at risk. If you add a driver to your policy, and then they have an accident, you will lose your no-claims bonus.
But if you simply purchase a separate short-term car insurance policy for them, this will keep your own personal policy, and your no claims bonus, safe. As such, this form of temporary cover can act as a protective measure to ensure that your own clean driving record is kept that way.
6 Factors that Affect the Price of your Car Insurance Policy
It will come as no surprise that the cost of car insurance has been on the rise for several years now. Those hardest hit by these increases are young male drivers, with the average 17 – 22-year-old male now paying £2,800 a year for their policy (according to statistics from MoneySavingExpert).
A recent article from the AA has suggested that these figures are set to rise further since the over-average amount of claims providers have received this year; which many have put down to the poor weather the UK has experienced over the summer months.
Because of this many are now looking for ways in which they can save money and reduce your insurance premiums. Fortunately, there are masses of ways of doing this; here are some factors you should take into account when in search of cheap car insurance:
1. The Car Type
Regardless of age, the type of car you are insuring will affect your premiums. Factors such as the engine size and performance, chassis type (i.e. SUV or Sports Car), and the cost of damage to parts will all have a bearing on the insurance group of your car. A 4.0 litre special edition sports car will have a high insurance group whereas a 1.2 litre family hatchback is likely to below.
2. Vehicle Modifications
Whether the modifications are aesthetic or performance-related they will affect the cost of the insurance. Things like tinted windows, sound systems, body kits, alloy wheels, and increased performance engine parts will all increase your premiums; failure to declare these to the insurer could also make your insurance invalid. Essentially the most cost-effective thing to do is to leave the car as standard.
3. Type of cover
There are three types of cover:
Third-Party: The minimum level of cover required to drive on the road in the UK. Third-Party covers you for any damage caused to another person’s vehicle, it also protects any passengers you have in the car at the time. Therefore if an accident is your fault, third-party insurance will not cover the cost of the repairs to your vehicle.
Third-Party, Fire, and Theft:
Offers the same level of cover as the third party however as the title suggests it also protects you if your car is stolen or set on fire.
This is the most comprehensive level of cover, meaning that even if an accident is your fault you are covered against the cost of repairing your vehicle along with any personal injury costs. With the fully comprehensive cover, you are also covered against the windscreen and accidental damage or vandalism.
Traditionally, the third party would be the cheapest level of cover, however, this isn’t necessarily the case anymore; the reason for this is that if someone is only covering their car third party it’s likely that they don’t really care that much about the vehicle and will therefore not be as careful as someone who has a fully comprehensive cover.
The type of cover that suits you best will be dependent on your needs, generally speaking, though the third party wouldn’t be suitable for a high-value vehicle conversely fully comprehensive may prove too expensive for a car that is only worth a few hundred pounds.
4. Named drivers
As previously mentioned young drivers’ insurance can cost a small fortune however one way of potentially reducing the premiums is to add a named driver. By adding an older driver with a clean driving history has the effect of reducing the risk.
Don’t be tempted to put someone as the main driver if it’s your car though even if it returns a cheaper quote, this is known as fronting and is illegal.
5. Multi-car Policies
One method of potentially gaining discounted insurance premiums is by combining all the policies in your house into one. Before trying a multi-car policy compare the prices of each car in your household; there is a chance this may work out cheaper but it also gives you a figure to haggle with the multicar providers.
Generally speaking the more cars you include in a multicar policy the more discount you will receive.
6. Consider your excess
Excess is the sum you agree to pay for any claim you make against the policy- the insurer covers the rest. E.g. if you make a £1000 claim and your voluntary excess is £200, you pay the first £200 and your insurer pays the other £800.
Some providers will reduce their premiums depending on your excess, so if you change your excess from £250 to £750 this could reduce your premiums substantially. Bear in mind this means that if you do have to make a claim against the policy you will have to pay the first £750 of the claim value.
Using Comparison Websites
Now that you are aware of ways to save money on your premiums, you can begin to search for a cheap policy- a great place to start is comparison websites; these will match the details you enter in the application form with a panel of providers to find the deals that suit your criteria best, the larger comparison websites will have a panel comprising of over 100 insurers.