Auto Insurance Explained in Simple Terms

Auto insurance, is insurance that you purchase for your cars, trucks, motorcycles and boats etc. It provides you with protection from losses that may incur as a result of a car accident. While this may sound simple enough to understand there are many types of auto insurance policies available to you and it can be rather confusing. Your coverage level and types will vary depending on the policy that you choose.

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Save Hundreds On Your Next Auto Insurance Policy

With auto insurance policies costing hundreds of dollars a year there is no doubt as a vehicle owner you would like to reduce this yearly expense. Your age, driving record and other factors can increase your car insurance premium. There are many ways you can reduce your auto insurance. The law in most states requires you to purchase a minimum amount of liability coverage. To provide yourself with enough protection it is usually recommended to buy extra liability which is not a huge extra cost.

Depending on your situation the following steps can be taken to help you save money. Shopping around is a quick and easy way to find a better deal especially if your current policy fee has gone up. It is possible to find insurers that can save you hundreds of dollars for the exact same coverage, even in states that regulate auto insurance rates. Increasing your deductible can save you ten percent or more depending on how high you go. This is a great way to cut your premium cost especially if you are a good driver. If the time comes just be prepared to pay approximately twice the deductible.

A good credit history report will decrease your insurance premium. Many insurance companies will analyze your credit history taking into account the risk factor when deciding on your final premium. Maintaining a good credit history and paying bills on time will allow you to enjoy lower premiums. You may qualify for a low mileage discount if you drive less throughout the year.

If your insurer offers this you may find it worth your while to commute to work using public transportation. When you take a holiday, instead of driving you could fly or take the train. Using your vehicle for work increases you insurance premium compared to pleasure driving.

If possible stop using your vehicle for business use. This strategy does not apply if you save more with a business expense deduction. A safe driving discount will apply if you have not had any accidents, moving violations, drunk driving convictions, etc. over a three year period. So obviously the best way to qualify for this discount is to drive carefully and defensively.

Cars are rated on a risk scale depending on how flashy they are. If you own a sports car or any high performance vehicle the risk is higher since they are targets for thieves and vandals. Driving habits are commonly more reckless with these vehicles as well so the insurance company will ask for a much higher premium to cover extra costs. Low risk vehicles will be your common sedans and station wagons.

If you live in a country setting with less crime and congestion it is obvious that the risk factor for theft and vandalism goes down substantially. This does not mean you should move to get lower premiums it might sway your decision if you are thinking about getting away from the city life. There may be a break on your premium if you park your vehicle in a garage. Some insurance companies allow this because of the less likely chance of theft or damage. Anti-theft devices like a car alarm or tracking system like On-star from GM may reduce your insurance costs.

Anti-lock brakes, automatic seat belts and airbag systems will also give you an option for lower rates. Theft and vandalism is obviously the highest cost to insurance companies so they usually reward policies holders with discounts when the above options are in place. Some insurance companies will give you a break when you purchase both auto and home insurance from them. Multiple cars under the same policy or with the same company could be beneficial as well. Other miscellaneous discounts could be AAA membership, having a defensive driving course or just being a long time customer. All the above tips are questions you can ask an insurance company when you start shopping around.

There are many companies out there that want your business and the competition is fierce. So remember, you do not have to accept a quote from the first company you go to. There may be a better deal around the corner.

John Whelan is a certified mechanic with 30 years experience and likes to share tips and resources that will help vehicle owners avoid costly auto repairs. For more information check out

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