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The Hazards of Choosing Cheap Auto Insurance

Cheap Auto Insurance: The Hazards of Choosing Cheap Auto Insurance

If you own a car, truck or other motor vehicle, states require you to purchase Auto Liability Insurance, which can protect you and your passengers in the event of a covered loss. Having your state minimum required liability limits may not always protect you from a lawsuit. The price to increase your coverage from the minimum to double or triple the coverage is usually minimal considering the protection you are getting.

Auto insurance rates are based on many factors and quotes can vary widely. Among the factors that insurance companies often consider when setting rates are age, gender, driving history, credit history, length of time with your previous insurance company, and the year, make and model of the vehicle(s). You can’t control your age, but to insure you’re always getting the best insurance rates possible, you can protect your credit, don’t let your insurance coverage lapse, and make sure you have a clean driving record.

If your car is financed, your lender will require you carry Comprehensive and Collision insurance. Comprehensive insurance protects you against damage caused by things other than a vehicle collision such as fire, hail, flood, vandalism or theft. Collision insurance is coverage that applies to your vehicle if it is damaged as a result of colliding with another object—another vehicle, for example, or a tree. Stay away from terms such as full coverage, not all insurance policies are created equal. One company’s definition of full coverage could just mean comprehensive and collision coverage, while another’s could mean the works, everything they have to offer.

In addition to Liability, Comprehensive, and Collision coverages, there are other important coverages to consider when purchasing car insurance. These coverages are the first to go when an agent is trying to sell you the cheapest insurance possible. Uninsured or underinsured motorist coverage provides bodily injury to you and your passengers if you are hit by someone without insurance or without enough insurance. Medical payments can help with out of pocket medical costs that may not be covered by your health insurance. It can also help financially if you haven’t reached your health insurance deductible.

Another step is to check the credit-worthiness of your insurance company through AM Best. If your insurance company has a strong financial rating, chances are excellent that it will have the ability to pay your claim when you need it.