Car Insurance: What is it, Exactly?

Car insurance is the agreement between an insurance company and an insured individual, with the latter paying premiums to the company in exchange for compensation should there be an accident on the road.

Finding A Deal On Car Insurance

There are several kinds of car insurance, some of which are required by law in order to legally drive. Policies are always specific about what damages are covered and how far the company will compensate the holder. Finding the best deal is can be as simple as getting a free quote from a reputable website.  Go online and find a review site to narrow down the best options for car insurance in your area.  Shopping around for car insurance is a great idea to make sure you find the best deal.

The most basic function of car insurance is to help handle the damages that a vehicle undergoes in an accident, which is known as collision coverage. This is not required by law but if you purchase a vehicle with a loan, then the lien holder will often want it. There is always a coverage limit with this insurance, with most companies starting at $100,000.

It is possible to change this amount, and there is often a deductible. This is the amount you need to pay out of pocket before the insurance company pays. This is typically $500 but can also vary.

Other Features Of Car Insurance

Comprehensive coverage is another feature. This covers the damages of a vehicle if something happens outside of an accident. This includes people or weather damaging it or if someone steals it. This is also not required by law, but the lien holder may prefer it if you lease it or use a loan. There is also a deductible and a coverage limit here, which is often $500 and $100,000 respectively. As with collision coverage, this can be changed.

Liability coverage is generally always required, and this covers damages that a person inflicts on another person. This pays for lost wages or medical bills when you injure someone using your vehicle. The property damage aspect will repair objects you damage as well. This will also pay settlements or legal bills if you are sued. While there is a coverage limit, there is no deductible.

The amount you pay for car insurance depends on the kind of coverage that you want and who is going to be insured. The rates for coverage and deductibles can be adjusted with comprehensive and collision policies. If the deductible is lower and the coverage is higher, then you will be charged higher for the premium. Age, gender, history and vehicles will also dictate your rates.

Staying Accident Free Pays Off

Our auto insurance through Allstate renews every six months. They send out a new policy with insurance cards and let us know how much it will cost.

Like everything else it usually goes up.

So I was very pleasantly surprised when I saw it going down, by about $25 per month.  Upon further inspection, I saw that everything stayed the same on the coverage, but that we had moved from Premier to Premier Plus status.

I contacted my agent and she confirmed that we got this status after having not filed a claim for five years.

That’s pretty cool.  Of course, on the flip side, if you figure that for the last five years they’d been getting an ‘extra’ $25 per month, they made back $1,500 out of whatever claim it was I had last filed.

But, I digress.

I also saw that they have a new program where if you pay up front, we qualified for an extra $10 per month discount.  So, I decided to do this.

Saving an extra $35 per month is pretty nice.  Right now, I’m still allocating the monthly amount toward our insurance ‘sinking fund’ as before just because I don’t want to rely on getting this discount, only have the cost come back should we ever need to file a claim.

Now, the trick is to stay accident free.