5 Things to Keep in Mind when Comparing Auto Insurance Policies

Do you want to buy insurance for your automobile? However, what you realize is that there are many vendors offering insurance policies for all kinds of vehicles. How can you choose the policy that will best suit your car and your pocket?

Today, we will show you the five points to consider when choosing an auto insurance policy.

Age and gender

Every auto insurance vendor looks at these two factors when deciding the premium amount. Let us start by looking at the age factor. Reports show that younger drivers have to pay a higher premium. This is because that they are new on the road and lack experience. Hence, they tend to have more accidents than experienced drivers do. Similarly, when it comes to gender, female drivers are safer than male drivers are. This is also based on reports, which suggest that male drivers have more accidents than female drivers do.

Driving history

auto_insuranceWhen you go to choose an auto insurance policy, the first thing the insurer looks at is your driving history. They examine if you are a good or a bad driver. This is decided based on traffic tickets, number for years you have been driving, number of accident reports against you etc. The logic behind this is extremely simple. The better the driver, the lower is the premium. The higher the number of accidents, the higher is the amount of the premium. In fact, some insurance companies even refuse issuing a policy on basis of a poor driving record.

Type and age of the vehicle

An insurance policy is extremely dependent on the actual automobile. Insurance companies examine the safety rating of a vehicle. They will also check if the vehicle is brand new, secondhand, or firsthand but old. Brand new vehicles undergo much stricter quality checks than their predecessors do. This means that they are less likely to break down and will run for a much longer time. On the other hand, secondhand and aged vehicles will be more susceptible to damage and breakdowns.

Place of residence

Another major factor for an auto insurance policy is the place where you live. Believe it or not, but the safety level of a street or a city plays a huge part. If the street where you stay has a reputation of being unsafe, the premium of the policy will increase. On the other hand, residents of a street or a city with low crime rates will have to pay much lower premiums for their cars’ insurance policies. In addition, city drivers will pay much higher premiums than those residing in rural areas.

Liability clauses

One of the biggest reasons for buying insurance is to reduce your individual liability in case of any accident or damage. There are two types of liability limits. The first is the limit when the insurance will kick in. So if your limit is set at 10 USD (for example), the company will not pay you any amount if the damage is for 9 USD. The second is if the car is completely damaged during the time you are making payments on the car, you are liable only to be repaid the depreciated value of the car. However, the company can compensate you for the difference between the original value and the depreciated value.

What is your opinion on the above factors for buying auto insurance? Share your thoughts with us in the comment box.


Laura is a freelance writer with more than 4 years experience and she is interested in various financial topics. You can now read more about the property insurance from Alka (or as Laura says in Danish boligforsikring fra Alka) on this web page.