Auto Insurance online - How it protects you and your vehicle

by Guest » Mon Dec 21, 2009 09:12 am

Every state requires you to purchase a minimum auto insurance or vehicle insurance coverage to protect you and others from damages caused by an accident. However, what kind of protection you will get depends on your state's auto insurance laws.

What is auto insurance?

Auto/vehicle insurance is where you pay a regular premium and the insurer compensates you for any financial loss that occurs if you get involved in an accident.

Because every state requires you to have the state minimum coverage, you should look for affordable auto insurance that will protect you if you have an accident. If you are a good driver and haven't had any parking tickets or accidents recently, then most insurance companies will offer you discount auto insurance policies.

What does auto insurance cover?

Your basic policy should cover the following:
  • Bodily Injury Liability: This provides protection if the driver, policyholder, or the policyholder's family member causes bodily injury to someone else.
  • Personal Injury Protection (PIP): If the passengers and driver of the policy holder's vehicle are injured, PIP covers the cost of treatment and may also cover lost wages, cost of replacing services, and funeral costs. Search the internet for best auto insurance rates.
  • Property Damage Liability: If you or someone else permitted to drive your car damages others' property, this coverage will protect you. When you look for free auto insurance quotes, make sure you will be covered under the Property Damage Liability coverage.
  • Collision coverage: This compensates for damage to the policy holder's car as a result of collision with another car. Even if you are at fault, this term will cover the cost of repair to your car minus the deductible. If you are not at fault, then your insurer will try to recover the cost from the other driver's insurer.
  • Comprehensive Coverage: Many of you may be asking yourselves "What is comprehensive auto insurance protection?". If you suffer a loss due to theft or a damage caused by something other than a collision, like a fire, explosion, earthquake, or windstorm, then this protects you.
  • Uninsured/Underinsured Motorist Coverage (UM/UIM): Individuals who buy cheap car insurance are often underinsured and do not have enough money to pay for losses if they are involved in an accident. If an uninsured, underinsured, or hit-and-run driver hits you or your family member, this term will reimburse the cost of your damages. You will also be protected if you are hit as a pedestrian. When you buy car insurance compare quotes for UM/UIM coverage from different companies.

What are the benefits of buying auto insurance online?

With many companies offering online auto insurance quotes, it is easier for you to research the policies, terms, and conditions and compare them. You can also check the company's auto insurance reviews to make the best choice.

Here are 4 benefits you can get if you buy auto insurance coverage online:
  • Easier research: The internet allows you to do extensive research on various companies without having to visit each company. You can easily find the cheapest legal auto insurance online to suit your budget.
  • 24/7 service: This is the best part about looking for information online; you can find information when you need it.
  • Manage a policy: You can manage your policy, print out proof of coverage, and view/ manage your bill online.
  • Claim: You can even file a claim online and follow it up online.

Which factors influence your auto insurance rates?

When you apply for an auto insurance coverage, the company sends over your application to the underwriters. The underwriters evaluate the level of risk associated with an applicant, and accordingly approve and fix his/her rate or reject the application. The factors which are usually considered for the auto insurance underwriting process are:

  1. Age and gender of the driver
  2. Driving records/ history of the one to be insured
  3. Prior claims history
  4. Efficiency of the driver (driving education)
  5. Model, make and type of the vehicle
  6. Age of the vehicle
  7. Mileage of the vehicle
  8. Location (where it'll be used)
  9. Purpose for which the vehicle is used (work, personal, pleasure or commercial etc.)
  10. How the vehicle is garaged
  11. Your choice of deductible, limits of coverage and benefits
  12. Auto insurance score
To know how these factors affect your auto insurance rates, click here.

Converting to a low cost policy

Discount auto insurance schemes can help you convert your basic policy into a low cost auto insurance policy. You can find many cheap auto insurance quotes that will allow you to save money and provide adequate coverage. Take a look at few of the ways to save money.
  1. Safety measures: A few insurers offer discounts for safety measures like anti-lock brakes on used cars.
  2. Multiple policy rates: Some of the bigger insurance companies that provide different types of insurance offer "bundle" rates if you buy several kinds of insurance, like life insurance and homeowner's insurance in addition to your car insurance.
  3. Safe driver's discount: In many cases, insurers offer a safe driver's discount if you go for a certain period without a ticket or accident, usually 3 years.
  4. Renewal discount: If you have been with an insurer for a long time, they might offer a renewal discount to get you to continue your current coverage.
  5. Discounts for students: If you are a student, unmarried, under the age of 25 years, and you meet the grade requirements, you may get cheap auto insurance.
  6. Choosing a higher deductible: If you choose a higher deductable, your premium payment will be less, but you will have to pay more if you have an accident.
  7. Type of car: The type of vehicle you buy is a factor your insurance agent uses to determine your auto insurance premium rate. The quotes you get for an expensive car will be higher than for a more standard car. The age and size of your car also determines how high your premium is.
  8. Good credit history: Maintaining good credit history may also entitle you to certain discounts.
  9. Low mileage discounts: Some companies may also offer certain percentage of discounts to individuals who drive less than the average number of miles each year. If you are one of them, then you may also get this privilege.
Apart from the above, there are other ways to maximize your auto insurance benefits while minimizing costs. Learn more...

Will your premium go up after you file a claim?

Every insurer will increase the amount of your premium if you are involved in an accident. The increase is decided by the auto insurance company you purchased your policy from.

If you have a bad driving record, your motor insurance company may refuse to renew your policy and varies from one company to another. Accidents caused by drunk driving are more likely to result in a non-renewal of your policy.

If you decide not to inform your insurer about a minor accident, it may cause problems later. If you get sued by the other driver, your auto policy provider might not cover you because of the time lapse. Even if the claim is not refused, it will be harder to find evidence to support your case.

No one can predict when they will get into an accident. Investing in automobile insurance, protects you and your family during accidents and from losing your license for driving without insurance.

Related readings

Useful auto insurance letter

I've heard of so many automobile insurance claims that affected the insured's premiums. Is it possible for anyone to guide me regarding the major auto claim factors that affect our premiums?

Total Comments: 154

Posted: Thu Jun 30, 2011 06:23 am Post Subject:


Posted: Thu Jul 07, 2011 01:36 am Post Subject: different car

Why would liability insurance go up on someone when they change cars from a 1999 dodge to a 1987 Lincoln? My insurance agent says because they consider the Lincoln more valuble but what dif does it make if only liability? Insurance went up 120.00 more a year.

Posted: Thu Jul 07, 2011 01:51 am Post Subject:

Why would liability go up between a 1980 VW Beetle and a 2010 Lamborghini? It goes along with the likelihood that the vehicle will be in an accident and cause property damage and/or injury. It goes more to the type of driver and the driving habits of the person who drives that type of vehicle. Would I be more risky behind a Lamborghini then a Beetle? Probably (YES!).

Its the same here but the distinction is less obvious. It's all about numbers and statistics.

It's also possible that it was not just the liability that increase.

Posted: Thu Jul 07, 2011 01:59 am Post Subject:

You mean since its a bigger car it will do more damage?

Posted: Thu Jul 07, 2011 02:05 am Post Subject:

No dif in driving habit. Just bought linc cause it was inexpensive. Also when you go online to search dif insurance co can your current insurance comp find out or even if I call diff ones. In other words do they communicate with each other cause I wonder why they ask who you are insured with now.

Posted: Thu Jul 07, 2011 03:56 am Post Subject:

No dif in driving habit. Just bought linc cause it was inexpensive.

Could be a "morale hazard" penalty rating. If you consider the car a "throwaway" (like a $50 VCR), you may be less likely to care about your driving than if you were driving a $200,000 Lamborghini. At least that's what the insurance company might be thinking. How's your credit rating?

Posted: Sun Jul 17, 2011 04:54 pm Post Subject: Does Premium affect claim amount?

Does the premium affect Claims amount to be paid? What factors attribute to the claim amount?

Posted: Mon Jul 18, 2011 12:57 am Post Subject:

Does the premium affect Claims amount to be paid?

Only to the extent that the premium you pay determines the total coverage you have. In other words, if you want $500,000 liability coverage or a $100 deductible for collision coverage, your premium will be higher than if you choose $30,000 liability coverage or a $500 deductible. Higher liability limits or less out of pocket expense in the event of a collision claim means a larger out of pocket expense when it comes to the cost of your coverage. It does not affect the outcome of a claim. Read on . . .

What factors attribute to the claim amount?

If you are talking about liability claims (your negligence behind the wheel damages the other party or their property), the severity of the damages is the primary determiner. Medical expenses for injured persons (or, worse, burial expenses), lost wages, totaling a person's Mercedes-Benz, knocking down a tri-color signal pole. Those are all potentially very large claims -- running into the hundreds of thousands of dollars perhaps (possibly more).

If you are talking about collision claims (damage to your property), your claim is settled on the basis of "Actual Cash Value" which means replacement cost minus depreciation. If your vehicle is relatively new, its ACV will be fairly high, but not as much as you paid for the vehicle, and if your vehicle is more than 8-10 years old, it will be (or close to being) fully depreciated, with only its salvage value remaining.

Again, settlement of a claim doesn't have anything to do with the premium you pay, but your premium is directly affected by the maximum value of the benefit you are obtaining. The insurance company provides the same level of service to the person who has minimum liability limits as it does to the person who carries a $500,000 liability policy with a $2,000,000 umbrella rider.

At some point in time, it becomes far less important to carry collision and comprehensive (other than collision) coverages, because the premiums are too high for the protection afforded. And although every situation is different, in my opinion, you can't have too much liability coverage, and almost everyone should carry at least $100,000/$300,000 liability limits and $25,000 or more in property damage coverages. The difference in cost from minimums to these amounts is, at most, a few hundred dollars more per year per vehicle.

Posted: Mon Jul 18, 2011 03:04 pm Post Subject: Claim prediction model

Does insurance company has a claim prediction model to predict the claims to be paid? How does it work?

Posted: Mon Jul 18, 2011 09:21 pm Post Subject:

Every insurance company uses actuaries to compile statistics and develop rates for their insurance products. They base their predictions on those statistics and other data.

Add your comment

Enter the characters shown in the image.