Having car insurance is a necessity and getting the best policy to meet your requirements can be a bit tricky. Understanding how car insurance works for first time buyers can help you select the most suitable insurance.
1. Minimum Requirements
Every state requires that every driver has minimum liability insurance. The requirements differ from state to state and it is important to familiarize yourself with your state legislation.
Liability insurance provides a driver with the means to take financial responsibility for the cost of injuries and damage to property of a third party (other driver) in the event of an auto accident. This insurance portion is often not costly and you aren’t required by law to have additional cover.
However, it is highly recommended to select a more comprehensive insurance policy to cover your own costs in the event of an accident (personal injury and collision cover) or if your car is stolen (theft cover). Comprehensive car insurance may have additional benefits such as a free towing service, maintenance plan, scratch and dent repair cover, etc. The additional benefits are nice to have but often not necessary and simply increase your insurance rate.
Another optional benefit is additional driver insurance. If any person other than yourself will be driving your car, it is best to select this option and add them to your insurance policy.
Uninsured and under-insured cover is a good option should you have an accident with a driver who has no or minimum liability insurance to cover your medical costs and damages.
2. Insurance Rate Calculation
There are many factors that may affect the insurance rate that you are quoted. The primary consideration is the make and model of vehicle that needs to be covered as well as the how new your car is. Newer, expensive cars will have higher insurance rates whereas older models will have a lower rate.
Your age and driving experience as a first time car insurance buyer will also affect the rate. Drivers under the age of 21 years or who have no previous driving experience will be charged more.
The amount of cover that you select may also affect your monthly premium. Insurance providers offer a range of different policies that offer different amounts of cover for specific provisions. The higher the amount of cover you select, the more you are likely to pay.
It is very important to compare car insurance benefits and rates from at least three different insurance companies to get the best deal. The most suitable insurance policy will provide the greatest value for your money (the most benefits at the lowest rate).
You should also take into consideration any discounts and special offers in your insurance comparison. Some insurance providers offer discounts for taking out more than one type of insurance policy (like household and auto insurance in one package).
Other providers lower a quoted rate once a driver has completed a driver experience course. These are great ways for new drivers to pay less for their car insurance.