Insurance Agents

If you drive, you need auto insurance - and you need a good one. Read on to discover a little about the types of insurance, and about how to get yourself a good auto insurance deal.

Forms of auto insurance

Auto insurance can cover many different dangers. The most important types are third party, collision, and comprehensive insurance.

"Third party" covers the most essential aspect of all of them. It protects you against the most destructive of all accidents: one where you harm somebody else. If you injure or kill somebody in a road accident, you could be liable for their hospital bills, their lost earnings, damage to their overall wellbeing, and much more.

The bills can be enormous, and they can easily run into hundreds or thousands, even millions of dollars. Clearly you don't want to be stuck with a bill like this - it would cause you total financial ruin. So, you take out auto insurance and pass on the risk. The importance of third party insurance is such that in some parts of the world all drivers are legally required to have auto insurance. This is true in the UK, for example, under the Road Traffic Act.

"Collision" deals with the costs of road accidents, such as the need to repair your car.

"Comprehensive" is more of an umbrella term, covering all the other things that could go wrong. Be warned that it is also a way for insurers to avoid telling you exactly what is covered - but it might include things like theft of your car, damage to its contents, or even the cost of repairs not necessitated by an accident.

How can I reduce my premiums?

Generally speaking, you can imagine two ways to reduce your auto insurance premiums. The first is to shop around and make sure you are getting the best deal available. The second is to demonstrate to an insurer that you will be cheap to insure.

Shopping around

Auto insurance is, paradoxically, both a competitive market and one in which many people pay more than they have to. The reason for this is that insurers are in cutthroat competition for new customers, and offer them good deals. But once they have a customer, they treat them much worse, and try to scrape as much money out of them as possible.

Some people get round this by changing their auto insurer frequently. The method works, but you run the risk of being caught with a bad insurer when you are in an auto accident and need their help. But you can get many of the same benefits by staying with the same insurance company, and simply making it clear to them that you will move if they don't offer you a good deal.

Also, remember that when you are buying auto insurance it is essential that you haggle. The person selling to you will have some discretion to offer you a lower price. But if you don't ask for it, you won't get it. The key here is making it clear to them that you do care about the price, that you won't accept paying over the odds, and that you are willing to go elsewhere if you aren't treated well.

Proving you're a good deal for them

You can only get so far by haggling and shopping around. At the end of the day, an insurer will always charge you more if they think you're going to cost you more. That is, you'll have to pay more if they consider you more likely to have an auto accident, or if you're likely to have a more expensive auto accident.

Some parts of this you can't change. As a general rule, if you're young you'll be charged more than if you're old. If you're male you'll be charged more than if you're female. But there's a lot you can affect.

If you have an expensive, fast car, you will be charged more for it. It's worth bearing this in mind when you buy your auto, but of course many of use would rather have a nice, fast, dangerous car than a safe old banger! Various organisations compile tables showing the cost to insure different cars. You will find a large variation even among cars of the same type. If you're going to invest in a sports car, for example, it's worth looking at these tables to find out which sports cars are cheapest to insure.

An excellent plan is to take extra driving classes. Auto insurers will often recognise this both as reducing the likelihood that you will crash (because the classes make you a better driver) and as demonstrating that youare the kind of person less likely to crash (because if you care enough about safety to take extra driving classes, you probably aren't a reckless driver). Just a few classes can save you a good amount of money on your auto insurance.