First auto insurance policy?
Whether you just bought a new vehicle or you’re branching off from another policy to get your own, navigating this market can quickly get complicated. There are so many companies out there providing multiple coverage options for drivers. Furthermore, insurance laws vary by state. As a first time policyholder, here’s what you need to know when shopping around for coverage.
Be aware of how liability coverage works
Auto insurance is designed to protect you against financial loss in the event of an accident. If your vehicle was at fault, you’ll be liable to compensate the other driver (and any pedestrians) that may have been affected. Insurance companies provide liability coverage to protect drivers against this type of loss. In fact, all 50 states require you to have a minimum amount of liability coverage.
There are two main types of liability: bodily injury and property damage. Bodily injury compensates the victims of an auto accident that you may cause (including medical expenses). Property damage is designed to compensate the owners of property that your vehicle has affected (for example, damages to other vehicles, fences, and garage doors).
While liability coverage is the legal minimum, it doesn’t cover any damages to you or your vehicle if you were to cause an accident. Personal injury protection is a type of coverage available for the treatment of injuries that you may incur during an accident. This option also covers passengers in your vehicle.
The basics of comprehensive and collision coverage
If you wish to protect your vehicle from any damages caused during an accident (regardless of who was at fault), then comprehensive and collision coverage are the best options available. Collision reimburses you for any damages caused from colliding with another vehicle, while comprehensive compensates for loss, damages, or theft of your vehicle.
How premiums are calculated
Many first time policyholders worry about how much their insurance premiums will cost. Your insurance premiums will be determined by the following factors:
- Age, gender, marital status
- Driving record over the past 3-5 years
- How you use your vehicle
- The type of vehicle you own
- The liability limits you choose, as well as coverage options (more coverage equals higher premiums)
- The deductible amount when you make a claim
When looking for coverage, make sure you compare multiple quotes and inquire about discounts. Auto insurance companies provide many different discounts, including student, military, and safe driving discounts.