Understanding Insurance Issues

6 Key Considerations to Make When Purchasing an Auto Insurance Policy

A lot of motorists unfortunately don't put enough consideration into their auto insurance policy selection. If you don't put enough consideration into your auto insurance policy, it can hurt you down the road. You might pay more than necessary or realize they don't have needed coverage when it's time to file a claim.

The following are six key considerations to take into account when you purchase an auto insurance policy. 

1. Your premium costs

You need to carefully evaluate premium costs before committing to a policy because you need to be able to afford your premiums. If you miss a payment, your policy could be canceled and you'll be left without coverage. This could cause you big problems if you are pulled over by law enforcement or get into an accident without adequate coverage. 

2. The amount of your deductible

Another important consideration is your deductible amount. The deductible amount is the amount you have to pay before your insurance will start picking up costs after an accident. You need to choose a deductible amount that's low enough so that you can afford to pay it out of pocket in an accident. A lower deductible amount will usually mean a higher premium cost. Therefore, you need to find a good balance between a low enough deductible amount and a low enough premium cost.  

3. The value of your vehicle

The more valuable your vehicle is, the more expensive it is going to be to insure if you purchase collision and comprehensive coverage. Before you buy a vehicle, make sure that you can afford to insure it. 

4. The types of coverage you invest in

The three main types of insurance you'll need to consider are liability, collision, and comprehensive coverage. You are required by law to purchase liability coverage. This coverage pays for the costs of damages to other parties you are deemed responsible for in an accident. Collision and comprehensive coverage cover the costs of damage to your own vehicle. If you don't invest in collision and comprehensive coverage, you will have to pay out-of-pocket for damages to your own vehicle if you were at fault. 

5. The maximum coverage amounts on your policy

You'll be expected to meet state-mandated requirements regarding how much coverage your policy offers. However, it's always a good idea to invest in liability coverage that goes above and beyond the state-mandated minimum coverage requirements. If the maximum coverage amounts on your policy are too low, you could end up facing severe financial difficulties if you're involved in an accident that ends up costing a lot in damages. You'll be expected to use your own assets to pay for any damage amounts above your policy coverage maximums. 

6. Your driving history

Your driving history is going to impact the costs of your insurance. Hopefully, you have a clean driving record. If you have no infractions on your record, most insurance providers will insure you. If you have some infractions on your record, finding affordable coverage might take a little more work. You might want to look specifically for insurance providers known for working with motorists with less-than-perfect driving records.