Auto Insurance Tips

If you go to the street and ask people what they understand by the terms 'comprehensive' or 'collision' coverage, you will be surprised to find out that lot of them do not really know what these terms really mean, even though they go on paying their auto insurance premiums year after year. So, our today's topic is auto insurance:

Collision coverage: your insurer will pay for repairs to your car after a smashup if it was your fault or you can't collect from the driver who caused the accident.
Comprehensive coverage: protects you against other losses -- for example, if your car is stolen or vandalized, is hit by falling objects, catches fire or is damaged in a flood. In addition, the comprehensive covers loss of items installed in your car, such as a radio, but usually not anything that you are transporting in it (such losses are covered by your homeowner or tenant policy, as long as your car was locked when the theft occurred).

These two types of optional coverages may cause significant differences in premiums for various makes and models of cars. Their premiums are cheaper on cars that are harder to damage and easier to repair. Cars that are easily damaged in accidents or are popular for joy riders or are a valuable source of spare parts have more expensive premiums.

You may remember the following 3 tips while buying your auto insurance:
(i) Three Year Rule: In case of any mishaps, your insurer will reimburse you only upto your car's current retail value. This is very important and that's why you may consider buying both coverages when your car is less than three years old.
(ii) Largest deductible Rule: 'Deductible' is the amount you must pay before the insurer starts reimbursing you. Car owners typically accept deductibles of $250 but $500 might be better because that may reduce your premium by as much as 10%.
(iii) Too Old Car: If your car is more than 5 to 7 years old, or is worth less than $1,500, you may drop your collision and comprehensive insurance altogether and save money.