Car Insurance Pricing Plans
The law requires liability insurance for all drivers and vehicles. This means that if you are involved in a serious accident, and it turns out that it was your fault, your insurance company will pay out any claims that are made against you. Extra coverage on your own vehicle, called comprehensive insurance, is optional.
Insurance companies based on a number of risk factors will calculate the price you pay for this insurance. Basically how it works is the more they feel you are at risk of crashing, and the more they think the resulting crash will cost them, the higher the premium youll pay.
Assessment
Common factors that will be to assess the premium are the value of the car youre driving, the safety of that vehicle, the coverage you want, will there be deductibles or limits etc.? How much youll drive the car, how your driving record stands, how long you’ve held your license, your age, and if you are young, also your sex.
The premium is then calculated. Usually there is a flat per car, per year rate that everyone pays, regardless of other factors. The other factors will then alter this rate, generally upwards. So if your car is especially fast or dangerous your rate will be increased by a set amount. If it is very old, your rate goes up. If youve had one or more accidents in the past, your rate will go up. If youre young and male, your rate will go up. The more of these factors you satisfy, the more your rate will be going up.
Discounts
As a sales enhancement, many car insurers offer a “low estimated future mileage” discount to customers who predict that the car’s mileage will be below some stated limit during the next premium period. There is no verification involved and no additional charge if the car is subsequently driven more than the stated amount. This arbitrary discount tends to foster customer belief in the mistaken idea that “miles” are just one of many classification factors used to raise or lower prices from the territorial base rate. In fact, odometer miles (which insurers do not use) are not a factor but a metric – the only valid basis for measuring each car’s consumption of insurance protection in on-the-road use.
The best way to save on car insurance is to shop around, keep a good clean driving record, drive safely, and choose reliable cars that are not known for their power and speed.
Car Insurance on Rentals
When it comes to car insurance, there are a couple of traps you can fall into. The contracts are complicated and extremely difficult to understand, and thats if you even have the time to read them. The fact is that most people dont read insurance contracts and there is a significant
information shortage when it comes to consumers and the contents of their own insurance contracts.
One of the problems with this information gap is that it can lead to wasted money. Every time you rent a car you are asked what kind of insurance you would like. The options are generally to take none, which costs nothing, or you could cover liability insurance, which should cost about 10 per day. Then you have a variety of options to cover the rental cat itself, prices for which vary from company to company and state to state. The full coverage option, which includes liability, passengers, and the rental car usually, comes to about 25 to 30 a day. Most people genuinely dont know what option they should be taking.
Liability
Liability insurance is the only insurance you are required by law to take out. All the others are optional. Thats the first and most important thing to remember when youre at the rental desk, and the total price for your two-week vacation car is quickly adding up and up. The other thing to know is that in many cases, you will be covered, to some extent by your existing car insurance. You will have to check your insurance policy to make certain, but for the vast majority of drivers, they will have liability insurance by virtue of their own car insurance, and this will carry over to the rental car.
It is however, unlikely that full or comprehensive coverage will carry over from your own car insurance. This is because comprehensive insurance is calculated based on the value of your car. Insurers dont want to be in a position where they set your policy based on your say, 15,000 vehicle, and then have to pay out when you crash a 40,000 rental. So your policy will state that only liability insurance is provided when you rent.
Credit Card Cover
You may still require no insurance from the rental company however. This is because many credit card companies, including both visa and MasterCard, offer this insurance if you pay for the rental with one of their cards. This is a major benefit of using a credit card and should not be wasted. Again you should check with your credit card provider what they cover, but the bottom line is, if your own insurance covers liability, and your credit card covers the rental car, why pay a couple of hundred pounds for extra insurance when youre already covered?
If you are in doubt as to your insurance, it is wise however to take the rental companys policy, especially liability.
Car Insurance What Is Liability And Collision Insurance?
You know full well that its the law, but youve been driving around without car insurance for a while now. Why? Car insurance is of supreme importance to any driver, no matter how good you think you are. Accidents happen, plain and simple, and you need to be protected in case it does. Not all car insurance is the same, though, and you may be a little confused as to the concepts.
The first term you need to know is liability car insurance. This covers you from claims arising from an accident where theres bodily damage or damage to property. Generally, there are three main sections of any liability car insurance policy: bodily injury liability coverage, liability coverage for damage to property, and uninsured coverage. The first type of coverage protects you in the case of an accident, for which you are at fault, and others have been injured. Your liability car insurance company will pay any legitimate claims for medical expenses or lost wages. If youve run into someones wall, or the side of their house, youll need liability insurance for property damage, which will pay for repairs. In the instance where you are not necessarily at fault and the other driver does not have liability car insurance, you are protected by uninsured, or under-insured, motorist coverage.
Liability car insurance is not the same as collision car insurance. As you can see, nothing was mentioned about fixing your car in the above description. Thats because its not covered under a simple liability car insurance policy. Youll need collision car insurance, unless youre willing to pay out of your own pocket. Collision car insurance covers repairs to your car in the case of, you guessed it, a collision with another object. If youre one of those people who gets their kicks by running over poor, defenseless animals, this coverage isnt for you. Youll need comprehensive car insurance to fix that cracked headlight.
Generally, you can choose youre deductible rate, i.e., the amount that your car insurance company will pay out to repair your car. Typically, the higher the deductible, the lower the car insurance premium. You will definitely need collision car insurance if you are leasing a vehicle, if you own a fairly new car or if you are making payments to a finance company. Owners of much older cars may want to skip this form of car insurance altogether. If your car is totaled, the car insurance company will pay you that market value of your car, minus the value of your deductible. If you are able to absorb the cost of replacing your car yourself, you may want to forgo this.
Car Insurance Protect Your Second Wife!
Auto insurance in general, which includes car insurance is an insurance consumers can purchase for cars, trucks, and other vehicles. Its mainly meant to provide protection against losses incurred as a result of car accidents and also thefts of vehicle. It also includes losses arising due to natural calamities. To have your car insured is mandatory by law. When you insure you get a “policy” which is based on a variety of factors including the type of car you drive, as well as what kind of insurance you want, as these policies are actually a package of different types of insurance coverage. They can be classified as:
Liability – This coverage pays for accidental physical injury of the body and damage to others property. Injury damages include medical expenses, pain or suffering and lost wages. Property damage includes damages to the automobile. This coverage also pays for defense and court costs. State laws fix how much liability coverage you must purchase, but you can also get more coverage if you wish.
Collision – This insurance pays for damages to your vehicle caused by collision with another vehicle or object.
Comprehensive – This coverage pays for losses or damages to the insured vehicle that doesn’t occur in an auto accident. The possible types of damages comprehensive insurance covers include loss caused by fire, wind, hail, flood, vandalism or theft.
Medical Coverage – Pays medical expenses regardless of whose fault it was as long as the expenses are caused by an auto accident.
PIP – Personal Injury Protection (PIP) – This coverage pays medical expenses for the insured driver, regardless of whose fault it was, for treatment due to injuries arising in an auto accident.
Uninsured Motorist – Pays for your car’s damages when an auto accident is caused by another driver who doesn’t have liability insurance.
Underinsured Motorist Pays for your car’s damages when an auto accident is caused by someone who has insufficient liability insurance to settle all your claims.
Rental Reimbursement – This type of insurance will pay for a rental car if your rented car is damaged due to an auto accident. Often this coverage has a daily allowance to be paid for at the time of renting a car.
Certain insurance policies club together a number of these types of coverage. Depending on the laws that exist in your state you have to choose the insurance you want for your car. Even though the state may not require extensive insurance, extra coverage may be worth the expense as it is possible that you may be straddled with thousands of pounds because of an auto accident.
