Understanding auto insurance is not that difficult, but sometimes there just seems to be so much information to keep up with that it can be easy to get lost.  So I want to break down auto insurance into a few basic steps that will cover everything you need to know.

1.  Many things can affect your insurance rate

There are many, many factors that come into play when insurance companies determine your insurance premiums.  These factors include things such as 1) your driving record, 2) the number of tickets you have received, 3) past claims you made with previous insurance companies, 4) the type of car you drive, 5) the length of your commute, 6) the safety rating of your car, 7) your location, 8 ) whether you have anti-theft devices, and on and on it goes.

2.  Insurance rates vary greatly from company to company

All of these factors are very important, and each auto insurance company rates each aspect with different levels of importance.  That is why it is so important that you shop around for the best car insurance quote.  If you don’t, there is a good chance that you will be sending your insurance company extra money every month.  And the good news is that it is so easy to get free auto insurance quotes quickly – especially online.

3.  Don’t let your policy expire

Letting your auto insurance policy lapse will probably cost you more money down the road than you would have saved.  Insurance companies view those that drove without insurance as very irresponsible, and they will charge you a higher rate to insure you.  If you do shop around to find a better deal, be sure that you have a new policy in place before your old one runs out.

4.  Lower your rates with higher deductibles

Insurance prices are determined by many factors, but the ultimate goal is for the insurance company to determine how much they might have to pay for claims and divide that among the customers.  So it makes sense that if you raise your deductible then you will pay less in premiums since you are responsible for more out-of-pocket expenses before the coverage kicks in.  But don’t rob Peter to pay Paul.  Be sure that you are able to afford and are willing to pay that deductible should anything happen.  You never know when you will have to make a claim.

5.  Take advantage of discounts

Again, anything you can do to drop the risk of an accident or theft will help lower your insurance rates.  If you drive less by taking public transportation, install anti-theft devices, or have an excellent driving record, you will probably pay less for your insurance.  But be sure to ask about these discounts!  Not all companies will tell you about them up front, especially if you are an existing customer.  That is why it is so important to shop around – you just might find a much better deal.