How to Choose and Bargain For an Auto Insurance Policy

Insurance is a form of risk management primarily used to protect oneself against the risk of a contingent loss or something bad happening in the future (unforeseen circumstances). Insurance has also been defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a larger, possibly devastating loss.

The company selling the insurance is referred to as the insurer while the insured is the person or entity buying the insurance. The premium is an amount of money or insurance coverage that you pay once or regularly for an insurance policy and this charge is usually determined by the insurance rate.

The insurance industry provides protection against financial or physical losses resulting from a variety of hazards or danger. I remember my friend, James, asking me how important insurance really is. I didn’t bother trying to explain the concept to him until a day came when his car was badly damaged by a little rock on the side of the road into which he mistakenly bumped. Luckily for him, the state had made it mandatory for all car owners to insure themselves against accidents.

I guess the compensation he received afterwards did the explanation for him. By purchasing insurance policies, individuals and businesses can receive compensation for losses due to car accidents, medical expenses, fire and storm damage, theft of property, loss of income due to disability or death and lots of others.

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If you are a car owner, you probably already know something about car insurance. At least you may have heard the words premium or deductible. But the real question here boils down to whether you truly understand the nature, scope and different aspects of an auto insurance policy as well as how to make a better choice regarding the best coverages.

Securing your first car insurance policy should be a matter of priority even though you might think otherwise. Car insurance protects one of your first investments, your car. However, in many cases car insurance can be complicated and often times, new car insurance shoppers are unable to compare and match up car insurance rates and in turn fail to garner the financial benefits of discovering the best and affordable car insurance available to them.

Of course, prices vary by company and you should compare prices thoroughly before you purchase a policy. The first thing that affects your policy’s price is, of course, what kind of car you drive. Some cars are known to costs more to insure than others. If you purchase a vehicle that has a high theft rate, your coverage will probably be more expensive. Essentially, though, your coverage will be based on the value of your car.

Another factor that affects auto insurance costs is where you live. If you live in an area where there is a high occurrence of accidents or vandalism, insurance will likely cost more money. For instance, since more cars are damaged in urban areas than in rural areas, you will probably pay more for insurance if you live in a city. It’s a matter of logic here.

How often you drive will also affect your insurance costs. The more you drive, the higher the chances that there will be an accident. Drivers who have long-distance commutes will pay more than people who live near their workplace. Meanwhile, if you only use your car on weekends, your insurance rates should be lower than someone who commutes to work daily.

The final factors that affect the price of auto insurance have to do with your person or who you are. Basically, your age, sex, marital status and driving record are all taken into account when you buy an insurance policy. Records indicate that accident rates are higher for drivers under the age of 25, so if you are young, expect to pay a little more.

Also, accident rates are higher for young and single males. It doesn’t really appear to be fair, but if you are an unmarried 20-year-old male your insurance rates will definitely be affected (higher). If your driving record is impeccable, though, your rates will be lower. Obviously, drivers who are prone to accidents or traffic violations will have to pay more for insurance than other drivers who are considered to be more safety conscious.

Do not be bothered, just in case these cost influences are beginning to scare you as there are various ways of keeping your insurance rates low.

How then can one influence the cost of auto insurance?

Fundamentally, there are four suggested factors that can keep auto insurance rates down. Check if you fall into any of the categories below. If you do, you may be able to save yourself some money on your car insurance regardless of the cost or worth of your automobile.

1. Consider buying a car that “looks good” to insurance companies. Most insurance companies know what kinds of cars could be prone to problems and those that are most often stolen. If you are still looking at buying a car for yourself, then find out what cars make this “good list” among auto insurers.

2. Ask insurance companies about special discounts that may be available to you. For an array of reasons many insurance companies offer discounts to their customers. If you feel that certain personal factors make you less prone to risk or accidents, then feel free to bargain and ask insurance companies about specific discounts that may be available for you.

3. You may also consider sharing driving responsibilities with a group of individuals or using public transportation to get to work. The less you use your car, the lesser your insurance will cost you.

4. On a final note, drive cautiously! Insurance companies are not happy to insure accident-prone drivers. The safer you drive, the less you will have to pay for auto insurance.

Keep it in mind to demand certain discounts from your insurance company if you wish. It could save you some money.

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