A car insurance quote is an estimate of how much an insured can pay for an insurance policy. This is calculated based on the driver's age, the state he lives in, his driving history, the type of car he drives etc.
On the other hand, a car insurance rate is the amount of money the insured pays for a car insurance to cover losses, expenses, and provide a profit to the insurer for each unit of risk covered, for a given period of time. Car insurance rates are calculated based on the type of insurance and limits one chooses. This is also done based on the driver's personal information like age, type of car, driving history, where one lives (state) etc.
To obtain an insurance quote, information about the driver and the automobile are needed. Apart from personal information like age, driving history etc, Information about the car like social security number, address, vehicle identification number (VIN), number of miles the car can cover within a given time etc are required.
To proceed, the Insurance Information Institute (III) advises the driver to compare from at least three car insurance companies or providers.
Comparing insurance quotes requires the driver to look carefully at areas that can favour him. Areas like what providers deduct before compensating, coverage limits amounts etc. The driver should also look for optional insurance coverages that can supplement if mandatory insurance run out of limit.
Let us now look in detail at three things that matter when we compare insurance quotes.
1) LIABILITY LIMITS.
The driver is advised to select appropriate liability limits, since this type of coverage is demanded by law in most states in the USA. Most states set limits that drivers must respect as seen in our previous article; 20,000, 25,000 and 50,000 Dollars, depending on whether it's body injury or property coverage.
The liability coverage helps pay for someone else's injuries, car repairs, medical bills, legal charges etc in case of an accident. The driver has to consider choosing insurance rates above state liability limits and possibly adding optional insurance coverages like, collision, towing and Labour, car reimbursement, Gap Coverage etc . This is to relieve the driver from footing bills from his pocket in case the expenses of an accident supercede the state limit minimum liability coverage. Remember the higher the state limit liability coverage the higher the premium paid.
The driver should be vigilant to make sure the insurance rates he chooses are the same on the three insurance quotes he is comparing. Be them state minimum liability, in the domain of body injuries and property damage; or the additional optional coverage.
2. SET THE SAME DEDUCTIBLES FOR THE RATES YOU COMPARE.
Some car insurance coverages, such as collision coverage and comprehensive coverage, typically come with a deductible that you may be able to adjust. A deductible is the amount you'll pay out of pocket toward a covered claim. Increasing your deductible may lower your car insurance premiums, says the III. However, a higher deductible means you'll pay more out of pocket before your insurance coverage kicks in after a covered loss.
When you are comparing car insurance rates, the deductibles you choose should be the same for each quote so you can make an accurate comparison.
3. COMPARE CAR INSURANCE RATES WITH THE SAME COVERAGES.
While liability coverage is required in most states, other coverage requirements vary from state to state. Some coverages may even be optional. You may want to familiarize yourself with your state's specific car insurance requirements before you begin asking for quotes. Then, make sure you've selected the same set of required and optional coverages for each quote to help you accurately compare car insurance rates.
The following list shows standard and optional requirements for most car insurance policies.
Required car insurance coverages:
- Liability coverage: Helps pay for another person's property damage or medical bills if you cause an accident.
Required car insurance coverages in some states:
- Uninsured and underinsured motorist coverage: May help cover your expenses if you're hit by a driver without insurance, or without enough insurance.
- Medical payments coverage: Helps pay for medical expenses if you or your passengers are injured in a car accident.
- Personal injury protection (not available in all states): Coverage may help with hospital bills, lost income and child-care services if you're injured in a car accident.
Optional car insurance coverages:
- Comprehensive coverage: Helps pay to repair damage to your car that wasn't caused by a collision. Coverage may include theft, vandalism or animal damage. If you're leasing or paying off a loan on your car, your lender may require you to have comprehensive coverage.
- Collision coverage: This coverage helps pay for repairs if your car is damaged or totaled in a collision with another vehicle or object (such as a fence). If you're leasing or financing your car, your lender may require collision coverage.
- Rental reimbursement coverage: Helps pay for a rental car - while your car is being repaired after a covered accident.
- Towing and labor cost coverage: May help cover certain services if your car breaks down. Jump starts, fixing a flat tire or towing may be covered.
- Gap insurance coverage: If your brand-new car is totaled in a covered accident, gap insurance may help pay off an underwater auto loan.
If you need help understanding your car insurance quote, talk to a local agent. They can help you customize an auto insurance policy and choose coverages that suit your needs.
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