Auto Insurance 101

Trying to understand the terminology and coverage options that come with navigating auto insurance can be confusing. With this guide, you can confidently find the right auto insurance that meets your needs and helps you understand the essential terms and strategies.

What Out-of-Pocket Expenses Does Insurance Create

You should consider these two out-of-pocket expenses when looking at insurance policies:

  • Premium – Your driving record, vehicle, and location determine the amount paid for insurance.
  • Deductibles – This is the amount of money you will have to pay out of pocket for your insurance steps in to cover the remaining costs.

It’s important to note that if you have a higher deductible, your premiums will be lower, and it also means that your out-of-pocket costs will be higher when you file a claim.

Types of Auto Insurance Coverage

There are four types of coverage available when you buy an insurance policy:

  1. Comprehensive Coverage – This policy covers the cost of damages not caused by a collision, like natural disasters, theft, and vandalism.
  2. Liability Coverage – This policy will cover the cost of damages if you are found at fault in an accident; however, it does not cover your injuries or damages to your vehicle. There are two parts to this coverage – property damage liability and bodily injury liability.
  3. Uninsured/Underinsured Motorist (UM/UIM) Coverage – This policy will help pay for your expenses if you’re in an accident with an underinsured or uninsured driver.
  4. Collision Coverage – This policy will cover the cost of damages to your vehicle if you’re in an accident, no matter who is at fault.

Understanding the terms of your insurance is essential. If you have to file a claim, you must submit a formal request to the insurance company. This claim must be submitted by the policyholder (the policy owner). The policyholder can be yourself or a family member.

You should also read through your policy to fully understand situations or conditions that your policy does not cover, otherwise known as exclusions.

Tips and Tricks for Finding the Right Coverage:

  1. Choose The Right Deductible – Choosing the right deductible is important; you’ll want to ensure you can afford a higher deductible before choosing it for lower monthly payments. Understanding the advantages and disadvantages is crucial when deciding on a deductible.
  2. Understand Your Needs – You may find yourself in a situation where you may not need full coverage on a vehicle. So, make sure you fully understand your needs before making a decision.
  3. Maintain A Clean Driving Record – You can reduce your insurance rates by having a clean driving record, so try avoiding traffic violations and consider attending a defensive driving course. Many times, safe drivers are rewarded with lower deductibles.
  4. Review Your Policy Regularly – It’s essential to regularly review your insurance policy if you have significant life changes, like moving to a new area or buying a new car.
  5. Ask About Discounts – Consider asking your insurance provider about discounts you may qualify for.
  6. Inquire About Loyalty Perks – Long-term customers may have access to specific discounts or perks, so ask your insurance company if any loyalty incentives are available.
  7. Bundle Your Policies – It may be a good idea to bundle your home and auto insurance if you have one insurer.
  8. Avoid Making Small Claims – If you make frequent small claims to your insurance, then you may cause your premium to increase. Consider paying for minor repairs yourself to save you money down the road.
  9. Shop Around – Take time to contact multiple companies to get several quotes to ensure you are getting the best insurance price for your situation.
  10. Know Your Car's Value – You should track your vehicle's worth and adjust your policy accordingly so you don’t end up paying for coverage you don’t need.

Understanding the world of auto insurance can be confusing and complicated, but once you understand the essential terms, you can have a clearer idea of what to look for in coverage. It’s also important to be actively involved in your insurance shopping process so you make the best decision for your situation. Our team at Tuscaloosa Hyundai is also available to answer any questions you may have about purchasing a vehicle.

Tuscaloosa Hyundai 33.171383, -87.487678.