How to Estimate the Cost of Auto Insurance Before Buying a Car
Learn about auto insurance before you buy a new car, as the car you buy will impact your premium.
Your driving record, location, and the type of policy you choose affect how much you will pay.
Decide on the type of coverage you want (collision, liability, or multi-risk), then compare the quotes.
Check out the insider’s guide to the best auto insurance companies.
Although you probably know very well that you will need
car insurance – it’s required by law in almost all states, after all – sometimes it’s an afterthought.
However, here’s the problem: The cost of auto insurance should be factored in when you are in the process of buying a car because the type of car you buy affects your.
car insurance premium.
Let’s take a look at what to consider when buying auto insurance and how to go about purchasing a policy.
10 factors that influence the cost of auto insurance
According to the National Association of Insurance Commissioners (NAIC), the average national premium for auto insurance in 2018 was $ 1,189.64. This drops to $ 99.13 per month.
However, the cost can vary depending on everything from the make and year of your car to where you live and your driving record. Here are some factors that can affect the cost of your policy:
The type of coverage you choose
Most states require that you carry liability insurance. Minimum liability requirements vary from state to state and will affect the amount of your premium.
You can also opt for comprehensive auto insurance, which can help cover the cost of repairing or placing a car that has been damaged or destroyed by something other than a collision. Think of natural disasters such as flood or fire, wind, theft or vandalism.
You can also purchase auto collision insurance, which can cover damage to your car in the event of a collision with another car. If you finance or lease a vehicle, your lender may require collision insurance and comprehensive auto insurance.
Finally, there is comprehensive auto insurance coverage, which is a combination of liability, collision, and comprehensive coverage and provides the most protection.
* Most states require some type of liability coverage
Your auto insurance deductible is the amount you will pay out of pocket on a claim before your insurance coverage goes into effect to cover the rest. The higher the deductible, the lower your premium tends to be. On the other hand, the lower your deductible, the higher your premium.
If you live in an urban area, your rate will generally be higher than if you live in a rural or suburban area. This is because densely populated metropolitan areas tend to have higher rates of theft and vandalism.
Your driving record
If you have a clean criminal record, your insurance policy will generally be lower. But if you have a history of driving with crashes and traffic violations, expect to pay more.
How often do you drive
The fewer kilometers you accumulate on your car, the lower your insurance premium can be.
Your age, sex and marital status
While your race and religion are never factored into the cost of your deductible, your gender, age, and marital status may.
According to NAIC, singles, drivers under 25, families with young drivers in the household and men tend to have more accidents. In turn, they usually pay higher premiums. People over 65 also tend to have more accidents and pay more for car insurance.
Your credit insurance score
Just as your credit score can affect the type of auto loan you qualify for, your credit-based insurance score can increase or decrease your insurance premium. Unlike a credit score, which is used by lenders to determine the likelihood that you will default on a loan, a credit-based insurance score is used to determine the likelihood of you incurring a loss. insurance (and therefore you have to file a claim).
Discounts offered by the carrier
Many carriers offer a discount if you sign up for auto-pay or pay six months in advance of the month, or if you are part of a group or organization and purchase your insurance through them.
You can also get a discount if you have a good driving record or if you bundle different types of insurance (such as home insurance or life insurance) with the same insurer.
The year, type, make and model of your car can play an important role in the amount of your insurance. Whether it’s new or used can also play a huge role. In addition, the safety features of your car can affect your premium.
If you have ever filed auto claims
If you have already filed claims, it could increase the cost of your premium.
Compare quotes to estimate the cost of auto insurance
When shopping for auto insurance, start by determining what type of coverage you need and what makes sense for you and your situation.
You’ll also want to compare quotes side by side. So try to get some quotes for the same type of blanket so you can compare apples to apples.
The good news is that when you ask an insurance company for a quote, it will only take a little bit of your credit. This means that your credit score will not be adversely affected.
When you get a quote from an auto insurance company, you usually need to provide the following information:
Your personal information (i.e. legal name, address, date of birth, occupation)
Type of car, expected annual mileage
Type and amount of coverage
Make sure you read the fine print and know what limits and restrictions apply to a given policy.
Check prices regularly to save money
The beauty of auto insurance is that you are not locked into a policy indefinitely. When it’s time to renew your policy, usually after six months or a year, you are free to use another company.
It is best to compare rates well before the end of your insurance period. This way you will have plenty of time to do your research and make a decision.
By researching and getting auto insurance quotes before you buy a new car, it can help you estimate the total costs of your new trip.