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Take Cover! The Basics on Car Insurance - Part Two

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In Part One of this report, we discussed a few of the basic insurance coverages for your vehicle. Once you've determined the types of insurance you'll need, it's wise to get quotes from a few insurance companies. In the eyes of the law, coverage is coverage, but you'll want the piece of mind to know that your company has the resources to handle your claim, the customer service to help you quickly and courteously, and reasonable prices for the coverage you need.

Insurance is available through three different outlets. Independent agents are affiliated with many different companies that provide insurance. They'll meet with you and gather your information, then submit it to several different companies to come up with the best package of service, reliability and price. Insurance agents represent only one insurance company, but can still provide all the coverages you're likely to need for your new car. Other insurance companies offer their product direct to the consumer with no agents at all. These companies, working through web sites such as GEICO.COM and QUOTESMITH.COM often advertise the lowest rates, but keep in mind that they tend to accept only applicants with the cleanest of driving records. If you have two or more accidents or violations in the last three years, plan to spend about twice as much for coverage as a "preferred" customer would. If you have a DWI on your record, you'll be in a much higher insurance bracket, or 'risk pool', until your record is clear.

The Rating Game

Each insurance company is rated differently when it comes to customer service and reliability. Luckily, once-obscure rating and consumer information is now relatively easy to find over the internet. Friends, family and co-workers can help you fill in the remaining blanks when it comes to personal experience with a company.

Of the insurance rating companies, the most common are A.M. Best, Standard and Poor, and Moody's. Standard and Poor's rating system is as follows: AAA - Exceptionally strong, BBB - Good, BB - Marginal and CC - Weak. Not all companies use these exact ratings, but a rule of thumb is to avoid companies with a "C" rating, as they may not have adequate funding or soundness to meet your needs. State Insurance Regulators also record consumer complaints and post 'complaint ratios' for different insurers on the web.

As you'd rate your insurer, you can also rate your car on some key insurability factors. Cars that cost less to insure typically have a low theft rating, high safety rating, and are rated high in National Highway Traffic Safety Administration (NHTSA) crash tests. In the NHTSA tests, cars are crashed at 35 miles per hour into a barrier simulating a real crash. From there they are rated for driver and passenger safety on a scale of 1 to 5 stars, with 5 being the highest. If your car rates high on these tests, consider yourself lucky. You'll be safer in the event of a crash and will probably pay lower premium on your insurance. Check out NHTSAs website at www.nhtsa.gov for the test results of several new-model cars.

How Low Can Your Premium Go?

That depends on several factors including age, lifestyle, even your credit. If you can answer yes to any of the following questions, you could be in for lower insurance rates.

  • Does your car have anti theft devices, such as an engine cutoff system?
  • Will you be insuring more than one vehicle, or your home, with the same insurer?
  • If you're over 70 years old, have you taken a defensive driver course?
  • If you're under 25, can you prove that you're an "A" or "B" student?
  • If you're under 25, have you had drivers training education?
  • Is your driving record clean for at least three years?

There may be other factors that can help lower your rate. Be sure to talk to your agent about any other discounts you may be eligible for to get that insurance payment as low as possible.

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