Car insurance is a complex subject, albeit a necessary one. Many drivers tend to be fed wrong information through word-of-mouth advice or misleading websites. It is very important that drivers know the myths from the facts regarding car insurance so that they can understand their coverage and make informed decisions. Here are some car insurance tips that drivers need to know.
Tip No. 1: Understand how a ticket increases your car insurance rates. Many insurance companies only charge for moving violations, so parking tickets do not affect your insurance. Similarly, there are many other types of tickets which do not cause an increase in the rates, and they vary from company to company.
Tip No. 2: Car insurance does not cover everything inside or on the car. Many people have a common misunderstanding that stereo equipment and aftermarket parts added on the vehicle are covered by their insurance policy. While the coverage depends from person to person and company to company, in most cases, the coverage for the car contents is very low. A car insurance policy is mainly used for covering impact damages to the car and medical bills resulting from accidents. So, ensure that your home insurance covers these add ons. If you have equipment and aftermarket parts installed on your vehicle, make sure you keep the receipts for the same.
Tip No. 3: Understand your no-fault insurance: No-fault insurance is a gray area. It does not mean that, in case of an accident, no one is at fault. There is always someone at fault in a collision; just that, irrespective of who is at fault, the companies pay the claims for their respective subscribers. The at-fault party naturally will see increased rates.
Tip No. 4: Insurance does not cover every car you borrow-If you happen to be driving a borrowed car and are at fault in a collision then the owner of the car will see a rise in his car insurance rate, not the borrower. This is especially important to understand and be aware of in case you happen to borrow cars frequently from friends.
Tip No. 5: Understand the legal minimum prescribed by your state: Each state has prescribed obligatory legal liability coverage and every driver needs to be aware of this. But one must also be aware that this amount is not the perfect amount and does not cover collision and comprehensive coverage. Drivers need to carry more than the legal minimum to avoid out-of-pocket expenses in case of collisions. These legal mandates are in place to ensure that no one drives a vehicle without liability protection for other drivers.
These tips are essential to be understood in order to avoid penalties at later stage.