Many people spend a lot of time researching the latest car models, the jazziest colors, and the most impenetrable auto safety features. But very few people take time to learn about car insurance and what it entails.
This explains why various false myths cloud the insurance industry. For example, you will hear some people say that red cars are more expensive to insure, which is simply not true. Anyway, here are three things you should know before buying auto insurance.
How Premium Prices Are Determined
Every insurance company has its criteria for calculating premium prices. But some basic factors cut across the entire auto industry. These include your driving record, your usage of the car, make, model, and type of car.
Other factors that may also affect your insurance costs include the following.
Your Credit Score: In most states, insurers will check your credit score when determining premium prices. It's believed that drivers with good credit get involved in fewer accidents.
Your Age and Gender: Research shows that young drivers without much experience on the road and male drivers are more likely to cause or get into accidents. If you fall into that category, your insurance costs may be higher.
Where You Live: If your area has a high crime rate, you're more likely to file for insurance claims than a person who lives in a peaceful neighborhood, which may affect your premium prices.
There Are Multiple Ways to Reduce Auto Insurance Costs
Many insurance companies will offer you discounts for various reasons. For example, purchasing auto and homeowner insurance coverage from the same company may see you get some discounts.
You can also benefit from the No Claim Bonus (NCB). This feature in your policy rewards you for being a safe driver and not making a claim for an entire policy year. You will receive a discounted premium when it's time for renewal. Also, if you don't make any claims for subsequent years, the discounts keep on growing, and this will reduce your insurance costs significantly.
Some insurers also offer discounts for installing car safety features, low mileage, and being a good student with good grades. Ask your insurance company which discounts you may be eligible to receive.
Most Personal Auto Insurance Policies Exclude Driving Your Vehicle for Business Purposes
Your personal auto insurance policy doesn't include using your personal vehicle for business uses. Whether you're using your car for rideshare services or delivering pizza, you might end up covering all losses from your pockets if an accident happens.
To be safe, talk to your insurer about how you plan to use your car. They may advise you to buy a special car insurance policy or upgrade your current coverage based on your vehicle usage and preferences.
