Auto Insurance: Four Things You Need to Know

Purchasing auto insurance coverage is complicated, whether you shop online or through an agent. While the internet makes it easier to compare policies and pricing, all of the unfamiliar phrases and language used by insurance providers make the process extremely daunting. What’s more, long-standing beliefs — or myths — about how insurance works can confuse even experts. To help make the process a little easier for you, we’ve put together four facts regarding auto insurance that you should be aware of.

The More Expensive Your Car Is, the More Money You’ll Pay for Auto Insurance

The type of car you drive does matter when it comes to determining auto insurance premiums, but it’s not as simple as just looking at MSRP. A lot of other factors go into calculating your rate, including how much coverage you need and how much driving experience you have.

You Can’t Compare Apples to Oranges

Insurance companies use different methods to calculate risk when setting rates for different customers. The best way to compare policies is to look at the same coverage from different insurance companies. The cost of the same coverage may vary significantly between carriers, and it’s important to know what you’re paying for.

The Cost of A Deductible Affects Your Rate

The amount of money you pay out-of-pocket when filing a claim has an impact on your premium and how much you’ll pay annually for coverage. If you have a high deductible, it’s likely that you’ll pay less for your annual premium than someone with a low deductible. However, keep in mind that if you do choose a high deductible, you will need to pay more a lot more money out of pocket in the event of a claim. If you are an inexperienced driver, consider opting for a low deductible.

Your Driving Record Matters

Your driving record is, in fact, one of the most important factors that determine how much you’ll pay for auto insurance each year, along with where you live and what type of car you drive. Drivers with DUI convictions or those who have been involved in multiple accidents typically see higher premiums because they’re considered higher risks by insurance companies.