Car insurance insures against damage to your automobile and expenses associated with accidents. It protects one of your main assets and also limits your potential liabilities â?? i.e. the expenses due to an accident or theft. If you own or drive a car, you must get car insurance against any unexpected events. Policies are generally purchased for a year or six months from property and casualty insurance companies.
Your policy specifies the amount of coverage:
â?¢ if you are legally liable for bodily injury
â?¢ if you and your passengers incur medical bills
â?¢ if your car is damaged as a result of an accident or other event (like a tree falling on the car)
When you purchase car insurance, you set the terms for coverage with the insurer. You pay a premium based on the coverage you select.
Your insurance premium can change from one year to the next in response to various factors:
â?¢ Value of the insured vehicle: the higher the price of the car, the higher the potential damage and in turn, the insurance premium. So get an insurance estimate before buying the car.
â?¢ Amount of coverage: the larger the coverage for liability, the greater the potential amount your insurance company will have to pay for the claim. So your insurance premium will be higher if you want more coverage. If your net worth and income are high, you should have sufficient coverage to protect your assets.
â?¢ Deductibles: the amount you are responsible for paying before any coverage is provided by the insurer. So with a higher deductible, your premium gets reduced.
â?¢ Your age: you might pay a higher premium if you are younger, as younger drivers are more accident-prone.
â?¢ Your driving record: your previous driving record is a reasonable indicator of your future driving record. So if you have a poor record, your car insurance premium will be higher.
â?¢ Type of vehicle: some cars experience more severe damage and are more costly to repair. These type of cars will have higher insurance premiums.
â?¢ Location: car insurance premium is more in congested city areas.
â?¢ Discount: you may get a discount off your premiums for special anti-theft or anti-accident features present in your car.
Author Kevin Harleydate added 2009-08-25 14:56:07