Auto Insurance Basics: Tips To Lower Your Coverage Costs

There are lots of unknown complex terms associated with the auto insurance policies. As a result, people end up confused with the type and amount of insurance coverage to buy for themselves. Hence, it will best in their best interest to consult an auto insurance guide or expert before going for insurance shopping in the local market.

However, here are some common insurance terms that are grossly misunderstood by the policy buyers.



Auto insurance terms
According to the insurance experts, consumers should never concentrate only on the premium part of the policy; instead they should also look for the kind of coverage that is necessary for them. So, auto insurance buyers need to visualize the amount of compensation they expect from their insurers before settling for a particular policy.

In order to streamline the shopping process and help them buy an affordable but appropriate auto insurance policy, here are few explanation to what some of the most common insurance terms imply:



Comprehensive - It is rated ‘yellow’ by some of the insurance underwriters. Comprehensive coverage provides compensation to the vehicle owners in case of damage wrought by natural calamities. In other words, auto insurance providers cover risks like hailstorm, wind, flood, rioting, burglary, bird-hit and so on. It does not cover collisions involving fellow human beings. This type of coverage usually does not require any deductible. Comprehensive coverage may be necessary for car owners depending on their location, type of vehicle and financial condition.

1. Liability - This type of coverage has been rated ‘red’ since it entails severe threat to one’s life as well to others while driving. People with liability coverage will be compensated by their insurers for any sort of bodily injury, legal costs and property damages in case of an accident. This will help into protect the income and the personal assets of the policyholder, if he/she is involved in a major accident. Moreover, one can mitigate a financial loss post a car accident but it is practically impossible to get away from the lawsuits filed against them.
2. Collision - Insurance experts have given a ‘yellow’ rating to the collision coverage. It provides compensation for all the repair works undertaken after the car has been seriously rammed by a car. Factors like age of the car and its costs must be evaluated before deciding on collision coverage.

Tips to reduce auto insurance costs
Following tips will help the policy buyers to save on their auto insurance coverage:

• Higher deductibles - Usually, people keep their deductible amount constant but it is one of the most suitable ways to lower the annual insurance costs. Car owners with good driving history will be able to take more advantage by increasing the deductible on their policies. However, they have to set aside a part of their income to pay the deductible while filing their claim.

• Car safety - In order to lower the auto insurance costs, policyholders may opt for car safety equipments. This is because car’s with added safety features like automatic seat belts, air bags, daytime running lights, anti-lock brakes etc qualify for affordable insurance policy. Risk perceived on these types of cars is low and so, insurers agree to provide discounts on their auto insurance coverage.

• Car profile - For insurance underwriters, model of the car and its prices is also a big factor while deriving premiums on auto insurance polices. So, cars with high maintenance and repair cost will automatically drive up the premium amount on the coverage. Moreover, cars with high vulnerability to theft will also be regarded as high risk coverage commodities for the insurers.

For that reason, auto insurance policy buyers may visit the website of ‘Insurance Institute for Highway Safety’ in order to find out further details on cars with their perceived risk amongst the insurers.