Here’s what to look for when buying car insurance

The freedom to go where you want – that’s what most people think of when buying a car. A car means unlimited possibilities. You can even imagine yourself driving down a long, winding road, not knowing where to go, just driving.

But for all the trips you want to take, you might be forgetting one thing: owning a car comes with financial responsibility. We are talking about car insurance here. When buying a car, getting auto insurance is one of the things you should also keep in mind.

With proper research, you can get the right coverage at the right price. Here are some of the things you might want to consider when buying car insurance.

(Photo: ANTHONY WALLACE/AFP via Getty Images)

Check car insurance types

The first thing to do is to familiarize yourself with the types of car insurance. This is essential because you need to know what you are buying.

There is liability insurance, which pays for damage to other people’s property.

On the other hand, collision insurance pays for damage caused to your car by an accident. Unless you are financing your car, this may be optional. In the event your car is totaled, collision insurance pays up to the actual cash value of your car.

There is also comprehensive insurance, which also protects your car. “It pays for theft and damage from fires, hail, floods, vandalism, falling objects and animal strikes,” according to Forbes. If your car is totaled, comprehensive insurance will pay up to the actual value of your car.

Read also : 3 reasons why the pandemic can affect your car insurance

Check the rates of new cars versus old ones

Contrary to the belief that new cars are more expensive to insure, new car insurance is, most of the time, affordable. This is because new cars are designed with advanced safety features.

The expected damage to your car determines insurance rates. Your car is less likely to be damaged if it includes more modern safety features. This is a factor in getting lower rates.

On the other hand, owning a much older vehicle that has already been paid off may mean that you don’t need much insurance. If it’s required in your state, you’ll likely need to purchase liability insurance. However, “collision and comprehensive coverage may not be worth the expense, especially if you can afford to repair or replace your car,” according to Investopedia.

Check how insurance prices are determined

Although each insurance company uses its own formula to determine premium prices, they all tend to use the same basic factors. Some basic factors include the make and model of the car, how you use the vehicle and your driving record, according to NBC News.

Your age, gender and marital status will also be taken into consideration, as statistics show that young drivers, who have less driving experience, are more likely to be involved in accidents. Statistics also show that male drivers are more likely to have an accident. On the other hand, married drivers are less likely to have an accident.

Another consideration is the location of your residence as there is a greater risk if someone lives in an urban area with high crime. Meanwhile, an insured who lives in a rural area with less traffic and fewer car thefts and break-ins has a lower risk.

And of course, your credit score will also be taken into account. In calculating premiums, insurance companies in many states may take credit scores into account. “The industry says its data shows drivers with better credit have fewer crashes,” NBC News said.

Related article: Types of Insurance Coverage You Should Choose When Buying a New Car

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