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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    by Charles French

    Here are a few auto tips that may help lower your auto premiums. Most insurance companies are pretty competitive when it comes to insurance rates. Although, there are insurance companies that prefer certain lines of business. Company "A" may favor their auto line of business over their homeowners policies. Company "B" may favor homeowners policies over auto policies. This could be due to a particular companies loss ratio or geographical location. Whatever the case, it is good to shop around to find the best rates available.

    Things to know when shopping auto rates:

    Before you call or ask for a quote, have your auto policy in hand. Inform the agent of your deductible amounts and limits of liability, medical payments, uninsured motorist, towing and labor and rental if needed. This way you are comparing exact coverages in comparing premiums.

    Insurance is a gamble, in a way. You may pay for auto insurance and never have an accident. Then on the other hand, you may purchase an auto policy and have an at fault the very same day.

    Don't be afraid of higher deductibles. Low comprehensive and collision deductibles make up the biggest cost in an auto policy. Example...if you had a $100 dollar deductible on comp and a $250 dollar deductible on collision, lets say this cost you $600 dollars a year. Now by increasing your deductibles to $500 comphrensive and $500 or $1000 dollars on collision, you could save two to three hundred dollars a year. If your car is financed, you need to check with the lender for their limits on your deductibles.

    NOTE: Many insurance companies have a clause called Accident Forgiveness. This means that if you or any driver listed on your policy had at fault accident, you would not be surcharged by your insurance company. In other words, your premiums would not increase due to the accident. In order to qualify, the company requires that you have had no accidents and no lapse in coverage for a predetermined time (usually three to five years) Ask your agent if your insurance company has this benefit.

    When shopping auto rates, it is important to know wheather your existing policy has the accident forgiveness clause. If you can only save a few dollars on the new policy, it may well not be worth changing. If you have an at fault accident soon after changing auto policies, the surcharge is around 30 percent.

    Here's a tip to lower your auto premiums:

    Many companies determine their rates on the limits of liability you have on your exixting policy. In other words, the rates will be better if your prior liability limits were 100/300/100 as opposed to 25/50/25.

    As an agent I have quoted thousands of auto policies. A misnomer is that all insurance agents are trying to get deep in your pocket book. Believe me, an agent won't write many auto policies by having the highest premium. When an agent is asked to do a auto quote, trust me, he will be trying his hardest to be competitive.

    Try this when asking for a quote. Ask the agent to figure the quote seperately with these two factors... your prior liability limits of 25/50/25 and 100/300/100

    Note ...the agent is merely quoting against prior limits, to determine if the premium would be lower.

    Lets say you ask an agent for a quote and you want the same liability limits as your existing policy. For instance, your current policy has 25/50/25 liability limits. When the agent does the quote, his system will prompt him, "What are the appilicants prior liability limits" This is where he enters 25/50/25 or 100/300/100. When using the higher limits, many times the premiums will be less than with the lower limits.

    If this is the case, and you decide you want to change auto insurance companies. Do This. Call your current insurance company and ask them to increase your liability limits to 100/300/100. You will probably want to wait for a few weeks to a month before changing insurance companies. This way you will be able to provide a declaration page from your prior company showing the new limits of liability.

    Multiline Discounts

    All insurance companies give discounts for multiline policies. Meaning that if you have your auto, homeowners, life, health or business insurance with the same company, these discounts will be applied to all policies. If you are satisfied with a certain company, it could be to your advantage to have them quote all your insurance needs. Many times you can save hundreds of dollars with multiline discounts.

    About the Author

    Charles French is an Independent insurance agent and owner of www.myinsuranceanswers.com. Use of article requires an active link to http://www.freetrialadultphonechat.net

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