Auto Insurance Quotes
Most people view auto insurance as an annoying but necessary expense. Really though it is an investment in your future and should be treated as such. It doesn't matter if you are looking for full coverage, liability only or a combination of those; the important thing is to get maximum value for your money. The best method to make sure you are getting a cheap but realistic quote is to shop around online first. Many times you will find that you can actually increase your coverage while cutting costs.
But what type of auto insurance should you get for your car? In general there are two types of auto insurance and they are very different from each other: Liability Only Insurance and Full Coverage Insurance. Of course there are many types of coverage in between and it is often possible to get a tailored insurance package, but to really understand auto insurance you would have to be familiar with these two.
Liability Only Car Insurance
Because car insurance is state regulated each state has different rules and guidelines concerning what type of insurance you need to have to drive legally at the road. All states however have some minimum requirements such as Third Party Liability Insurance. But the amount you need to have in liability insurance differs from state to state. Liability is insurance that covers other people and their belongings or property in case of accident. That means, if you cause damage or injury to another driver or pedestrian you must have adequate insurance ready for compensation. This is the legal minimum requirement for all vehicles to be road legal.
Then there are some other state minimums. For example, one state may require that you have at 25.000 dollars worth of personal injury coverage and 15.000 dollars worth of property damage coverage. Another state may require something different, so check in with your local authorities before you make a purchase.
One thing to keep in mind is that these limits are really only the absolute minimum, and not representative of the actual exposure you may face. If you only have 25.000$ insurance and the total cost ends up being 100.000$, which is not unimaginable in both injury and damage, then it is still up to you to come up with the last 75.000$. That would prove difficult for most people. It is not exactly pocket change we are talking about. A higher total insurance limit of course carries a higher premium so it is as always a compromise.
Full Coverage Car Insurance
Full Coverage Car Insurance is a comprehensive policy and the total opposite of Liability Only. Generally there are three types of coverage included: Third Party Liability Insurance, Collision Insurance and Comprehensive Insurance.
Third party liability has the same legal coverage as described already. The limits can be negotiated in both directions as long as the state requirements are met.
Collision coverage is an extra that you can sign to protect your car especially against, you got it, collisions. Most car owners come into contact with this kind of insurance when they finance their car, as finance companies require this insurance to pay out.
Comprehensive insurance is also known as non-collision insurance. It covers damages to your car that are not a result of collision. That could be fire, theft, vandalism and weather damage and many other things. Even if the name says non-collision, you are often even insured against collisions with non-vehicles such as animals. The logic here is that comprehensive insurance is your protection against accidents that are not likely your fault.
How premiums are calculated and how fair they are is a constant source of debate and grief for those that end up paying a high premium. Insurance companies use formulas to calculate the average risk for your profile. Some factors included are your age, sex and marital status. Experienced older drivers pay lower premiums than young and inexperienced drivers. In the same way, women pay less than men and married couples pay less than singles.
What this often means is that a young, single man ends up paying for all the rest because he fits the maximum risk profile. Some may consider this discriminatory, but that has been the way the insurance industry has operated for decades.
It is also common for insurance companies to do a credit check before calculating premiums. They defend this with studies that show higher risk of accident among people with bad credit rating.