Auto Insurance Basics

While we generally don't think twice about our automotive insurance once we've purchased a policy, all insurance experts advise us to reexamine our coverage every year just before it's time to renew. According to these same experts, we should also do our auto insurance homework long before we purchase that new vehicle.


Why? Because there's a broad range between premiums depending on many factors, not just the type of vehicle you need to insure. Of course, there is a big difference in premiums between insuring a high-priced sports car over an economy sedan. But there also can be an equally wide margin between a small pickup and a large sport utility vehicle. Doing your research before buying your next car is prudent and can save you both money and frustration.


Other factors that affect your rate may be things you cannot change, such as your gender and age. Young teenage males will find higher premiums than their female counterparts. More mature drivers may see rates climb once they hit 65 years of age. So, it's prudent to get the best deal on those factors you do have control over.

GLOSSARY OF TERMS
According to the Insurance Information Institute (III) a public information organization funded by the insurance industry, the most important factor behind policy owner's confusion is the misunderstanding of insurance terminology and their definitions. To help consumers better understand auto insurance terms, here are some quick definition of the most common types of coverage.

Bodily Injury Liability
This is generally referred to as PL and covers the driver and passengers of the other vehicle. Most states require all vehicle owners to carry this coverage. Ample coverage here is also critical in order to protect your other assets as well. The most common Bodily Injury Liability coverage is $100,000/$300,000 although some states allow much lower limits.