What You Need to Know When Buying Auto Insurance

We all hopethat we’ll never be in a car accident. But the reality is, whether it’s anaccident or a chip in your windshield, something will probably happen to yourcar over its lifetime that will require filing an insurance claim. Hopefullyyou have the right coverage.

If you’re inthe market for auto insurance, there are a few things you need to know aboutyour car and your car use that can affect your policy and premiums:

Your Car’s Market Value and Depreciation

Theminute you drive your car off the lot, it begins to depreciate. And some makesand models depreciate faster than others. What does that mean for you?

Ifyou’re in an accident, your car’s market value will be a deciding factor forthe insurance company when they determine whether to pay to have the vehiclerepaired or to declare it a total loss. Additionally, your car’s current marketvalue will establish how much you get paid if the vehicle is totaled.

Also,keep in mind that the more expensive the car, the higher the car insurancepremium. And the older the car, the less collision coverage costs.

Your Driving Habits

Drivinghabits affect your insurance rate. Previous accidents, possibly even accidentsfor which you were not at fault, tickets and/or past insurance claims show aninsurance company that, in theory, you may present a higher risk. Thattranslates to a higher insurance rate or possibly even a refusal to insure.

Thankfully,time heals most wounds, at least when it comes to insurance companies. Trafficviolations, accidents and previous claims drop off your record after a fewyears, lowering your risk to insure and with it your insurance premium. (Do beaware, though, that some issues, like DUIs, stay on your insurance record a lotlonger.)

Stats on Uninsured Motorists

Evenif you’re insured, motorists who are not still affect your insurance rate. Ifyou get into an accident with an uninsured driver, your insurance company isthen on the hook for everything. So, if you live in a state with a high rate ofuninsured drivers (like New Mexico), your premium may be higher right off thebat. But, if your policy doesn’t include uninsured motorist coverage, you couldquickly reach the policy maximum in an accident, and that could mean you haveto pay out-of-pocket to cover all damages.

Your Car’s Size and Safety Rating

Bettercar safety ratings will reflect positively on your insurance premiums.Insurance companies operate on the idea that a safer car means a smaller chancethat you will get into an accident and, if you do, that you or your passengerswill be harmed. Anything that means the car insurance company will have tospend less money on you means smaller premiums.

So, what’s thepoint?

When buyingauto insurance, you need to do a little bit of research about your car andwhere you are driving to get a good idea about what is (or is not) a good rate.Shop around so that you do not have to pay more for the same coverage justbecause of an insurance company’s brand. At the same time, do not skimp oninsurance coverage just to save what works out to a few bucks every month. And,if you’re in the market for a new car, consider the cost of insurance to get agood idea of the total cost of ownership, which includes more than just yourmonthly loan payment.