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The Actionable Guide to Affordable Car Insurance

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Affordable auto insurance is good to have even when you have good credit and your monthly expenses can absorb the additional premium. Competition among insurance providers is stiff; they want your business and will offer cheap insurance.

The catch, of course, is the kind of cover provided for the low rates offered. You need to do some research on the background of the insurance companies, their ratings, discounts offered etc. Read the offer document carefully. Read customer reviews.

Do you know how pay-as-you-drive policies work? The premiums are adjusted according to the number of miles you drive annually. The basic premise is that the more you drive, the higher the risk. Check your eligibility for cheap state-run auto insurance programs. California and New Jersey have such programs for people with very low earnings.

Remember, insurance companies are vying with one another to provide you service. Don’t give your business to the first insurance provider you talk to. Shop online and offline to compare quotes and the level of cover offered.

Consider these points when shopping for car insurance –

  1. Your car decides almost everything. The make, model, and cost of a car will decide your premiums for comprehensive and collision cover. If you haven’t yet purchased a vehicle and you feel that insuring an expensive car may throw your monthly budget off kilter, then you’re better off purchasing an inexpensive automobile.
  2. Each state has a minimum coverage requirement for liability arising from injuries and property damage. Check the amount on insurance commission website of your state or go to the National Association of Insurance Commissioners website to get figures for all the states in the U.S. If you’re planning to purchase a car through a loan, then you may be required to have car insurance covering a minimum amount.
  3. The time-tested and easy way to a lower premium is to go for a higher deductible, the out-of-pocket expense is higher. But you pay only when you’re responsible for an accident and your insurance company has to foot bills. Before the insurance company forks out money, you will have to pay the pre-agreed deductible amount.
  4. In some states, insurance companies check on credit scores before arriving at the premium. It’s in your favor to ensure that your credit history is as clean and presentable as possible. Simple financial due diligence such as using cash instead of credit and paying bills on time will allow you to get the best possible automotive insurance for your money.
  5. Let people know that you’re looking for insurance. It’s part of the entire research process. You may find a good quote online, but do check out cover offered by insurance companies that do business through a network of agents. You can get the names and addresses of the local insurance agents from your state’s insurance commissioner’s website.
  6. Ask for discounts. Insurance companies offer different discounts based on the distance travelled by car, age of the insurer, and to students, servicemen, vehicles with safety devices, etc. The Insurance Information Institute states that drivers over the age of 55 can clear a defensive driving course and get a 10% discount on insurance premiums. Check for discounts offered to members of professional groups. Companies also offer pay-as-you-drive discounts with premiums linked to the miles you cover. These discounts are capped at around 19,000 miles.
  7. Choose cover wisely. There’s no point in signing up for all the cover there is if you know that the chances of those events in your case are slim. A good insurance agent will inform you on the best combination for your situation. This is one reason why it is important to shop around for cover. For an old car that you own, you would be better off without comprehensive and collision cover. But liability insurance is essential cover in most states in America.
  8. State-run insurance programs cost less. If your income levels are around or below poverty level then you may be able to benefit from very low cost or no-cost insurance. Such policies, for example, the ones run under the California Low Cost Automobile Insurance Program can be availed for less than $400/annum and extend cover to around 12,000 drivers.
  9. Regularly check the premium costs and your insurance requirements. Both are liable to change over time. The miles you log in may increase or decrease. On review, you may find that you have become eligible for certain discounts.


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