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As
most drivers discover, operating a car can be a risky proposition. What's
worse, careless and inexperienced drivers can easily cause harm and
financial loss to others. That's why the law today
requires auto insurance.
There are three levels of auto
insurance you ought to know about.
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Third
Party Only
This is the minimum auto insurance coverage required by law in the US. As
the name implies, it provides reimbursement for financial losses suffered
by other people as a result of your driving. So if you crash into another
drivers fender or ride over someone's cat, the injured party can recover
money from your third party only coverage. This type of auto insurance
policy does not recover any damage to your car caused by your own poor
driving or by such unpredictable occurrences as fire or theft. |
Third Party Fire And Theft
Third party fire and theft is the
next step up from third party only insurance. In addition to covering
damage suffered by third parties who you may harm, it covers fire and
theft damage to your vehicle.
Fully Comprehensive
Insurance
Fully comprehensive insurance is
the most thorough and of course the most expensive form of car insurance.
In addition to the coverage's provided by third party, fire and theft,
fully comprehensive insurance helps pay for the cost of repairs to your
car after an accident, even if you are partly or wholly to blame. If you
own a new car or a recent model or valuable use car, fully comprehensive
insurance is worth considering. However, understand that if the you total
the car, you can't expect to be reimbursed for what you paid for it.
Because of the process known as depreciation, the value of your car begins
to decline the moment you drive it away from the showroom, and every month
you own the vehicle slices away another chunk of its value for insurance
purposes.
How Dose Auto
Insurance Pricing Work? |
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Just as life and health insurers base their charges on your age and
medical status, auto insurer's have developed elaborate protocols by which
they judge the likelihood of costly benefit claims from specific types of
drivers. These rules will determine the size of the premiums you will have
too pay. They include some points you have no control over. For example,
male drivers and those under the age of 25 paid more than females and
those over 25, since statistics show |
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they
are more likely to experience serious accidents. In addition, drivers who
operate their cars mainly in the suburbs or the country usually pay less
than City drivers.
On the other hand, there
are some price factors you do control, and you can influence these so as
to reduce your insurance premiums. But such options don't appeal to
everybody:
- Driving a
Conservative styled car with small a engine.
- Protecting your
car against break-ins. If you lock your car in a
secure a garage at night and equip it with an alarm or
anti-theft device, you may be able to negotiate lower
insurance premiums.
- Drive safely.
Higher premiums are paid by drivers with traffic
violations and by those proved being found liable for
accidents in the past. Keep a clean driving history and
your premiums will go down.
The best drivers are eligible for
a no claims discount. After six years of driving without a single
insurance claim, you may be able to save up to 65 percent on your premiums
obviously a substantial saving.
As soon as you file a claim whether the accident was your fault or not,
your no claims discount goes by the boards. So keep track of your claims
history and think carefully before filing a claim, especially if you're in
a minor accident. You may be better off paying for repairs yourself rather
than seeing your insurance premiums suddenly skyrocket.
Finally, as with all of
insurance, shop around before settling on a particular company and policy.
Don't simply accept high auto
insurance premiums as the inevitable lot of any driver. Look into all of
your options for trimming car insurance costs, including buying a car
that's cheaper to insure, fitting it with anti-theft devices, accepting a
high excess on your policy, and, above all, keeping up a safe driving
record.
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