Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • Car insurance is important because it protects your investment
  • Signing up for car insurance is an easy process
  • You just need some specific things ready before you sign up that identify you and your vehicle
  • Shop and compare first to save money on insurance and find the best policy

Car insurance is one of the most important parts of your financial security. It should be considered as important as your health or life insurance because you never know what lies ahead and how you may need to use it in the future.

The purpose of auto insurance is to pay for damages or expenses that you incur from a car accident or other mishap to replace the loss that you experienced from the incident.

For example, if you are involved in a collision, and you sustain $1000 in damage to your car, your insurance will pay for the costs.

Compare car insurance rates today by using our free comparison tool!

Factors that Determine the Amount of Your Claim

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The amount your insurer will pay depends on a few factors. Below are some of the most important ones that will determine how much they will pay for a claim.

  • Amount of coverage – The amount of coverage you have on your car insurance will determine the amount of your claim payment. An insurance company can only pay up to the amount that you are covered for on your policy.
  • Amount of deductible – The amount of your deductible is the amount that you have to pay in for your insurance to pay for damages. If you have a $500 deductible and a $750 claim, you have to pay in $500 before your insurer pays for the rest.
  • Whether you are carrying comprehensive coverage – Comprehensive coverage is meant to cover any expenses outside of expenses caused by an accident. Be sure to carry comprehensive coverage so that you will have coverage for theft, vandalism, and other damage that is not due to a car accident.
  • Whether you are in a no-fault or a fault state – You need to know whether you are in a fault or no-fault state and consider this answer as a factor when you make a decision on your car insurance plan.

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Type of Insurance Coverage You’ll Need

When shopping for car insurance, you will need to consider the type of coverage to get. This coverage will depend on some factors, including:

  • your risk level
  • your age
  • your driving record

Among these factors, your driving record is the main factor that most heavily influences your premium rates.

Risk Factors for Car Insurance

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Insurance companies weigh several risk factors and check your background to some degree to assess the risk that you represent when you start a new insurance policy.

If you are in the 18-24 age bracket, for example, your insurance will be higher than if you are in the 50-65 age bracket. People in the younger bracket have more accidents. They also have more fatal and serious accidents that result in a total loss.

Once you reach the age of 25 or older, you will see your rates start to drop again since you are out of that riskiest age bracket for accidents.

Other factors can affect your rates such as your credit score and marital status. There is some research that indicates that married people have fewer accidents than single people.

Also, insurance companies tend to consider a bad credit rating as a risk since they cannot be guaranteed that you will pay your bill on time.

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What You’ll Need to Get Car Insurance

Once you decide what kind of company and policy you’ll need, you should start gathering the information you will need to sign up.

Using our site to shop and compare is a great start. Then get a free quote and decide which policy is best.

To sign up for your policy, you will need the following information:

  • Driver’s license or state ID – You will need a state-issued driver’s license or at least your driver’s license number to apply for car insurance. If you do not have your driver’s license handy, you can enter your driver’s license number if you sign up online.
  • Social Security number – Your social security number serves to identify you and is normally required to sign up for insurance. Insurance companies take extra precautions to make sure your data is secure, as is the law.
  • Make and model of your car – You need to know the make and model of your car to get a car insurance policy issued. Without this information, an insurance company will not be able to process your application.
  • VIN number (if available) – Your VIN number identifies your car among millions of other cars in the world as a unique vehicle.

The insurance company needs this information, but it can sometimes be located online by an agent or using smart searching within the various search engines if you have your other information.

In essence, all you need is the information about your car, some identifying information about yourself, and a bank account that you will process the first payment with.

Insurance requires a first premium paid in advance to start the policy. So you should make sure that you have enough to make the first payment and that you can link a bank account to your insurance plan for automatic payments if you choose to do so.

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The Advantages of Automatic Payments

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Some people prefer to pay when they want and not do automatic payments but making automatic payments ensures that the insurance company is paid each month or quarter promptly.

This guarantee increases their confidence in you to pay on time, and they may even offer you a discount if you do it this way.

Insurance companies know that people sometimes get busy and forget to pay. When you put your insurance payment on automatic draft, you are guaranteeing that they will be given on time and remove some of the risks for them.

How to Get the Best Deals on Car Insurance

Saving money is important. But the amount of your premium is not as important as finding the best coverage.

As you shop for various insurance policies, you will want to consider how much you are paying for the coverage and think about what you will be getting in return.

If you have an accident, you stand to lose much more than a premium amount if your car is a total loss and you are not covered by car insurance.

So, it pays to weigh all of the factors when choosing car insurance and purchasing as much insurance as you can afford. There are some ways you can save on your car insurance. Consider these methods to get started.

Apply and ask about discounts that may help you reduce your cost and look for other ways to save on your car insurance. You may qualify for discounts based on the following:

  • your employment status (the kind of job you have)
  • your age
  • your driving record

The best thing you can do is to shop and compare different types of coverage before making a selection. Ask the important questions about coverage types and see if you qualify for discounts.

Shop around by comparing at least three different companies before making a decision.

Remember that insurance is something you have for a rainy day and hope you never have to use. But when you do, you’ll be glad you have it.

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References:

  1. http://www.investopedia.com/terms/a/auto-insurance.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186
  2. http://www.iii.org/article/what-auto-insurance
  3. http://www.alllaw.com/articles/nolo/auto-accident/no-fault-insurance-claim-work.html
  4. http://www.investopedia.com/terms/a/automatic-bill-payment.asp
  5. http://www.iii.org/article/how-can-i-save-money-auto-insurance