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Thursday, September 23, 2010

What Influences Your Auto Insurance Rates

By Cristina Abola

Car insurance is essential for anyone who drives and who owns or leases the car they drive. If you are a newbie to the scene, you'll need to buy auto insurance before you can take your car out on the road.

Insurance, insurance everywhere -- which do you buy?

The first thing you should do is to figure out what kind of car insurance you need. For example, if your car is new or worth a lot such that it's going to cost you a pretty penny to replace it, you probably want collision and/or comprehensive insurance. Collision insurance pays for damage to your vehicle if you have a collision with another vehicle or an object. Comprehensive insurance will pay for damage to the insured vehicle that doesn't happen as a result of an auto accident. So, for example, if your car has hail damage, comprehensive insurance will pay for its repair (after you pay your deductible, as applicable).

If your car is older, simple liability insurance will probably do, and it's going to save you a significant amount of money on premiums. Liability insurance won't cover any damage to your car, but it will cover you for property damage or bodily injury to the other party if you're involved in an accident and are the one at fault.

Saving money on auto insurance

Auto insurance rates can fluctuate significantly from company to company, but there are several factors that don't have anything to do with driving, necessarily. Where you live is going to determine how much you pay for your car insurance, because if you live in the city, you'll pay more than you do if you live in a rural area. Why? Because accidents and vandalism are much more common in urban areas than they are in rural areas. Your age, too, impact how much you pay for car insurance; if you're a younger driver, you'll pay more than an older driver, and if you are a male, you'll pay more than a female, even someone your own age. That's because male drivers have more accidents than female drivers do. As you get older, gender differences ease, so that by the time you're over 25, you should be paying less you are a male -- as long as you keep yourself accident free.

In addition to these things you can't control, there are things you can control to help save money on auto insurance rates. Here are a couple of them.

Pick a "safe" car

Your auto insurance company is likely to give you a break if you drive what they call a "safe" car. That is, if you drive a car that is a risk because of theft dangers or because it's not safe, you'll pay more. Do your homework to find out what your insurance company considers a "safe" car, and "low risk," and then make your choice thusly.

Be a good driver

No matter how old you are, if you're a good driver you're going to pay less for insurance then you will if you've had a lot of traffic tickets or accidents. So, be a good driver, pay attention to traffic laws (including speed limits), and you should save significantly on your insurance rates.

"Skimp" on driving

It's not always possible to avoid driving, but the less you drive, the less you're likely to pay for insurance. Carpool when you can, use public transportation to get to work, bike or walk short distances, et cetera.

Discounts matter

Most insurance companies offer some kind of discount to customers, whether they be "good driver" discounts, "good student" discounts, or discounts for having multiple policies with the same company. If you don't see any discount information advertised, make sure to ask.

Research before you buy

Do your homework before you buy. The Internet makes buying insurance easy, because you can compare quotes among several companies at a glance. You could save significant amounts of money simply by comparison-shopping policies side-by-side before you buy. Choose the best policy for you at the lowest price possible.

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