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What Do I Need to Know About Automobile Insurance?

Insurance is no longer an optional product. In many states, it is a requirement to operate a motor vehicle. But the process of purchasing insurance isn’t always as simple as the requirement itself. There are so many options, and so many ways to end up with a product that is not necessary. This is confusing, but it doesn’t have to be.

What type of auto insurance is required by law?

There are hundreds of different kinds of insurance. Generally speaking, governments only require one kind: liability. This is insurance that will pay another party’s expenses if you cause an accident or damage. The purpose of this insurance is to prevent a driver from causing an accident and then leaving the not-at-fault party with the expenses. Other kinds of insurance are generally not legally required, though they might be required as part of your loan.

What type of auto insurance will cover damage to my own vehicle?

The second most common type of insurance is called “collision” or “comprehensive.” This is coverage that pays you in the event your car is damaged, stolen or wrecked. Finance companies often require this insurance to protect their equity in the vehicle until it is paid off. Comprehensive and collision insurance can be expensive depending on the type of vehicle. Because it is not usually required unless your vehicle is financed, dropping collision coverage is one of the major ways drivers can save money.

How can I reduce my insurance bill?

Your insurance company will raise or lower your rates based on two things: the likelihood they will have to pay a claim, and the amount they will have to pay. One of the best ways to immediately reduce your premium is to maximize your deductibles. A deductible is the amount you will pay before making a claim against your policy. The higher this amount, the less likely it is your insurer will have to pay a claim, and the lower your premium will get. Secondly, find out what your insurer’s discount plans require and apply for those reduced rates. Good driver discounts, memberships, completing driving courses, etc. are all ways you can demonstrate responsible driving and get even more reduction in your car insurance premiums.

How should I manage my policy?

Car insurance is one of the easiest things to forget. The premiums are often spaced out every 60 days or even months at a time. It’s not something you think about generally until you’re in an accident. Most people probably don’t know their account numbers or who to call if they have a question or a claim. These are all easily remedied problems, but if they are ignored they can turn into nightmares. Take a picture of your important documents and keep them with you on your mobile device. Keep your insurance paperwork in a container in your car. The container prevents fiddly little pieces of paper from getting lost. Add your insurance payment schedule to a calendar somewhere visible in your house or on your mobile device. This will prevent you from forgetting to pay your premium and then finding out you were one day late after slamming into a bus full of lawyers and sideswiping a police cruiser.

What if I have an accident?

First off, don’t panic. Get out your phone and start taking pictures. Take pictures of the location, the final stopping point of each car, the damage to each (from multiple angles) your new best friend’s driver’s license, license plate, insurance information, address and phone number. Then take pictures of the road. Yes, the road. Take pictures of every street going in every direction. Make sure to review all of the pictures as you are taking them so you don’t end up with 200 impressionist paintings in traffic court. Then call your insurance company.

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