You’ve probably heard that the color of your car doesn’t affect your auto insurance rate and that your driving record doesn’t matter, either. You’ve also probably heard that your lender might require you to purchase collision and comprehensive coverage. These are all true, but what else do you need to know about auto insurance? Read on and visit auto insurance Newark DE to find out! Once you understand these basics, you can confidently shop for auto insurance.
You might be surprised to learn that car color has nothing to do with the cost of your insurance policy. This popular myth is because auto insurance companies do not gather data on the color of vehicles. According to R.J. Weiss, a certified financial planner and founder of personal finance site The Ways to Wealth, insurance companies do not ask drivers about the color of their car when calculating a rate.
Though car color is not an actual factor in your auto insurance premium, it impacts the price. Because the demand for certain colors is higher than the supply, the premiums are higher. This is true whether you drive a red or a white car. Nonetheless, if you have a red or blue car, you may find the insurance cost higher than if you drive a black or gray vehicle.
You might be thinking that your driving history won’t have an impact on your auto insurance rates. After all, it is true that auto insurers look at your past driving history when calculating your rate. But the truth is that your driving history has very little effect on your pay rate. In fact, a clean driving record will result in a 40% discount. However, you might have to pay more than that if you’ve had an accident or a traffic violation. However, this doesn’t mean that your driving record is not a factor.
Car insurance companies review your driving record when you apply for a new policy, but they rarely check if you’re renewing your existing one. This is because minor violations won’t appear on their radar, but major violations will, and your insurance company might end up paying out on the damage you caused. So you should avoid driving recklessly or drinking and driving.
State’s Minimum Liability Coverage
When purchasing auto insurance, your state may require that you carry bodily injury liability coverage. The amount required to carry this coverage varies from state to state. Usually, the minimum amount is 25/50/20, which means the maximum payout per accident or person is $25,000. You should always carry a higher liability amount to avoid being held liable in the event of an accident. The insurance industry recommends carrying at least 100/300/100 to ensure you’re fully protected.
You may also need to buy additional insurance to protect yourself. In many states, minimum liability coverage is required by law. Often, the amount is much lower than is necessary. When buying auto insurance, you should always purchase more coverage than your state’s minimum liability coverage amount. Your insurance company can help you with this. Just make sure to read the fine print. You’ll be glad you did!
About Your Lender
Your lender may require collision and comprehensive coverage on the auto insurance policy you purchase for your car if you are paying it off. However, you probably don’t need these policies if you do not own a car. However, they are still essential if you want to drive. Therefore, you may be able to save some money by purchasing collision and comprehensive coverage separately. Your lender may also require that you have liability insurance.
The cost of collision and comprehensive coverage for your car varies, so you may want to consider reducing the amount of coverage before signing on the dotted line. It may be worth reducing or dropping collision and comprehensive coverage if you drive an inexpensive car and have low insurance premiums. In addition, if your car has a high value, it is highly recommended to have collision and comprehensive coverage.