Car Insurance -- Clarifying Things

Car insurance is a contract between you and the insurance company. Under the contract, the insurance company agrees to pay your losses if your car meets with an accident. In exchange, you agree to pay the premium.

Property, liability and medical coverage are all covered by car insurance. In case of damage to or theft of your car, property coverage will pay for the losses. Your legal responsibility for bodily injury or property damage caused by your car is taken care of by liability coverage.

The cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses are taken care of by the medical coverage.

Majority of the car insurance policies are valid for six months to a year. You must renew the policy once it expires.

The law in all states require you to have some form of car insurance if you own or operate a car.

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The penalty for driving a car without insurance varies from state to state. Compounding of the car is done is some states. Some states impose heavy fines. Serious trouble. That's what's in store for you if your car is involved in an accident with insurance. You will have to pay out of your own pocket for any injuries or damages.

Your credit history, the age and type of your car are also vital factors in determining the rate you have to pay for car insurance.

You are responsible for providing insurance for any car you own regardless of who is operating the car. Your car will be operating illegally if it does not have insurance.

Finally, a few savings tips...

1. Getting married will bring down your rate by a huge margin. Insurers have statistical data that show that people are less reckless and much more careful on the road when they get married. Furthermore, as a group, their claims are usually less both in number and average cost per claim.

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2. If you want to keep your rates down, do NOT "pimp your ride." Things like changing your tires to bigger ones than specified by the manufacturer, adding equipment that will increase your car's horse-power will cost you a lot more. Any changes to your vehicle takes your rates up.

3. Before you get carried away with the few hundreds you will save on a house, check if it will not cost you much more in auto insurance. Homes in the same neighborhood may fall under different risk zones as far as your insurer is concerned.

So, as part of your home shopping activities, check how this neighborhood will affect your auto insurance rate. The truth is that most people don't think about this when they are about buying a home.

Since you may live in the same home for decades to come, a difference of $200 in auto insurance rates would amount to thousands over the years.

4. If you must quickly get something inside, turn your car off, lock up and pocket your keys. Don't leave your car unlocked and running. This is an open invitation to any thief sniffing around. Every thief checks how easy a target is before making a move. And what could be easier than a car that's ready to be driven away -- It takes just seconds.

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5. As an under twenty five, you can pay lower car insurance premiums if you use your parents' policy. Your parents are part of a lower risk age bracket.

To take advantage of this though, you'll have to live with your parents and also have the car registered in their name. If you do not like the idea of handing the car's ownership to them and other stuff that may be attached to that, then you will have to forget this alternative.

6. The most important step to massive savings in auto insurance is comparison shopping -- That's if you do it well. You can get quotes that will have a difference in excess of $1,000. You could conveniently save that much by just choosing the lowest quote. This should apply if you're just after the lowest price.

However, if you want the best value to price ratio then you'd have to look at the details of the cheapest offers. Different insurance companies may have different exclusions for similar policies. It's important that you ask the agent what's included and what's excluded.
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