If you don’t shop for quotes from auto insurers when your policy is set to renew, you could miss out on big savings. Just like everything else, insurance costs keep going up, which may mean you’re not getting the best deal anymore. But before you start getting quotes, here are a few things to help you understand exactly how auto insurance works.
Types of coverage
If your vehicle is registered in North Carolina, here are the coverages you should consider.
- Liability: Covers claims from injuries or damage to other people or property. This is required in North Carolina.
- Collision: Pays for repairs or replacement if you collide with another vehicle, regardless of who is at fault.
- Comprehensive: Covers costs for damage to your vehicle due to theft, fire and flood.
A deductible is the portion of the insurance claim not covered by the provider that you have to pay. The price of the policy is partially determined by the amount of your deductible. The higher your deductible, the lower your premium will be. This is because you – not the insurance company – are bearing more risk.
How do insurers determine their prices?
Because the price of the policy may be a deciding factor for you, it’s important to know how price is determined. Driving history, experience, type of car, the area in which you live, how far you drive to work and deductibles are all factors in the pricing of your policy. And under North Carolina law, auto insurance companies are permitted to access your credit information when pricing your policy. Many insurance companies believe that consumers’ credit histories can be used to predict whether the person poses a greater risk for filing claims.
Get the best rate
Above all else, a good driving record is a huge plus for keeping auto insurance costs down. Consider talking to your insurance agent about these additional ways to save on car insurance:
- Increase your deductible so you carry more of the financial risk in an accident. If you have a loan on your vehicle, you should check with your lender to ensure that you meet the lender’s insurance deductible requirements.
- Consider removing collision if your vehicle is older or has limited value. It’s possible that the cost of the insurance could exceed anything you would get back on a claim. Physical damage reductions offer the greatest savings with limited risk.
- Try to bundle your other insurance products, such as renter’s, home or life insurance with a single carrier.
Ask your insurance company about more ways to reduce your costs. Some insurance companies offer discounts for those who have completed defensive driving courses or special car equipment such as anti-theft devices.
If the rate seems high, it doesn’t mean you should cut important areas of the policy to reduce overall cost. The last thing you want is to be underinsured. It could jeopardize your entire financial future if you are held responsible in an accident and your policy does not have enough coverage.
Look to LGFCU to cover a variety of vehicles
Whether you are an experienced driver or newly licensed, comprehensive, affordable coverage is available to you for many types of vehicles. Call 888.732.8562 to get your free quote.
The advice provided is for informational purposes only. For additional guidance, contact a financial advisor or your insurance agent. Auto and Homeowners insurance is underwritten by The Members Insurance Company. This insurance is not a deposit and is not federally insured, or guaranteed by your Credit Union. Insurance representatives are licensed in N.C. only.