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Car Insurance: A Guide for Beginners

Author: Amitava Sarkar
by Amitava Sarkar
Posted: Jul 14, 2015

Buying a car is overwhelming with all of the available options on the market for not only models, but for financing and insurance. No longer can the search be narrowed by one manufacturer and price range, daily needs must also be considered. This is due to multiple models for one manufacturer available for around the same price. Wagons are ideal for those traveling with a lot of work supplies, while small sedans help with gas mileage for those with long commutes. Both can be within the same price range, but only one is designed for a specific lifestyle; determining the best one for you can be challenging. Buying insurance adds to the confusion. Many offer similar rates, but add or subtract certain breaks and fees for minute reasons. Monthly car payments are often designed for a tight budget, so the insurance must remain low-cost to keep within the allotted budget. For beginner buyers this can prove to be difficult, especially if they are young drivers. To find the right price, buyers must understand the terminology and the differences between insurance companies. The result will be adequate coverage for the least amount of money.


One of the biggest confusions with insurance is the term "deductible". Seeing a number greater than a $1,000 can also add to the anxiety. Deductible means the amount of money an insurance holder must pay before insurance kicks in and pays the rest. Of course, during an accident you’d like to pay as little as possible, but don’t immediately choose this option. The lower the deductible, the higher your rate will be; the higher the deductible, the less you’ll spend on monthly payments. It’s essentially a gamble. You can pay less monthly with a higher deductible, but you’ll need to spend a lot more money in case of an accident. The best way to decide upon the right deductible is to look carefully at your budget. Choose a rate most comfortably within the amount you can afford each month on insurance payments.


The precise location and where you park your car each night will grossly affect the amount you’re charged for insurance. This is due to crime rate and safety. For example, a driver living in the suburbs that parks his vehicle in a garage, will spend less than the driver who lives in the city and parks his car on the street. The latter is a higher risk for the insurance company because the probability of a break-in is increased. Additionally, each state carries specific laws that determine how much insurance its residents must carry in order to be considered safe to drive. Some states, like New Hampshire, don’t require residents to carry insurance if they haven’t been involved with specific crimes. Understanding these laws will help to translate insurance rates.


Depending on the car you drive, you may incur higher insurance rates. This is based on the expense it takes to repair these vehicles. Many European models like Volvo, BMW and the like, cost more to repair due to the way the car is manufactured and the cost of parts. Understanding this before you buy a vehicle will help you save when it’s time to find insurance.


The types of insurance carry terminology that can befuddle the layman. There are different types of insurance, all of which cover various aspects of the driver and the vehicle, but also carry their own price range. Liability insurance covers damage caused to the other driver’s vehicle in the case of an accident, where you’re deemed to be at fault. The insurance can be applied to both bodily harm and to the vehicle. Collision insurance is designed to pay you up to the current estimated value of your vehicle, in accidents where you’re not found to be at fault. Uninsured insurance covers costs of accidents where the other driver is at fault, but either can’t afford to make the repairs with his insurance or is tihout insurance. When you add comprehensive insurance to your package, you’re protecting your vehicle from damage and loss incurred outside of an accident. This addition is best for those living in urban areas, as it covers vandalism, theft, natural disasters and fire. Lastly, you may also see the term "Personal Injury Protection" or PIP. This additional feature will pay for your medical expenses and even lost wages when your car accident-related injuries make it impossible for you to go to work. Choose the insurance type and features based on your driving history, budget and location.

About the Author: Toby B. Jackson is a contributing author and former dealership owner. He ran his successful business from 1990 until 2011, helping his customers secure vehicles. Recently, he searched for his own car, he found one at the best new and used dodge auto dealer in the area.

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Author: Amitava Sarkar

Amitava Sarkar

Flag of India

Member since: Nov 28, 2014
Published articles: 359

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