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What to Look for in an Auto Insurance Policy a Guide for First-Time Buyers

Getting auto insurance for the first time can be daunting. Not only can it be confusing knowing what to do, but you can be faced with a huge premium. Due to this, it’s important to know what you should be looking out for.

Here we’ll give you all the information you need. We’ll see what coverage you should get, what extras you should be looking out for, and how to reduce your premiums. Read on to find out more!

Before Getting an Auto Insurance Policy

Before even looking into buying auto insurance, there are a few things you should consider. At the forefront of your mind should be the car you’re going to insure.

Have you already bought a vehicle, or are you looking into purchasing one? Either way, the car you drive can have a huge impact on your auto insurance rates. As a first-time buyer, it’s the biggest factor you can control.

It may be tempting to get a powerful car, but this is going to significantly increase your rates. For the first few years of driving, it makes much more sense to get a simple and safe car that will keep your premiums as low as possible.

There are many other ways to get cheaper car insurance, but many of these are out of your control, such as having a clean driving record, being over 25, and where you live. As a young driver, your car is the biggest thing you can control before looking into the specifics of a policy.

What to Look for in an Auto Insurance Policy?

When looking into getting auto insurance, it’s important to know what the terms mean and what you should be looking for. Let’s take a look.

Coverage Type

Perhaps the most difficult aspect to get your head around as a first-time buyer is the coverage options available. The exact type of insurance legally required can vary between provinces, but generally, you at least need insurance that will protect against losses when you are at fault for an accident.

Other types of coverage, such as collision coverage, are often optional. For example, if you have a low-value vehicle, then you may not be interested in collision coverage as the cost of repairing the vehicle will far outweigh its value.

The non-comprehensive cover won’t include losses from the likes of theft, natural disasters, and vandalism. If you live in a safe area, then you may be willing to take the risk and not include this insurance coverage.

Being fully covered for everything will be more expensive than narrower types of coverage, such as third-party liability. Before signing up, it’s important to know exactly what you are covered for, and what you aren’t.

Many make the mistake of just signing up for the cheapest insurance and getting a shock when they are not covered following an accident.

Usage-Based Insurance

Are you happy to have your movement tracked via telemetrics? This is where a small device is installed in your car to monitor your driving. It checks on your acceleration, braking, cornering, speed, and location.

Many find this intrusive and limiting, but if you’re confident that you’re a safe driver, then it can be a great way to save money. If you’re happy to do this, look for this option when looking for car insurance.

Deductible

When you have an accident, you often must pay to make a claim on your insurance. This is called a deductible, and it’s generally there to stop people from making small and insignificant claims.

When you first look into getting an auto insurance policy, you can often choose what the deductible will be. However, the higher the deductible, the lower the monthly premium.

This gives you the temptation to put the deductible as high as possible to lower your payments. After all, unless you have an accident, you never need to pay the deductible. However, this is risky, and you should never set the deductible at more than you can afford.

deductible

Bundles

Do you also need to look into other types of insurance? If so, then it’s worth looking for an auto insurance policy that will allow you to bundle it with other insurance types from the same company. Doing so can give you a lower combined cost.

Other Factors

You can also look at other policy options that may reduce your premiums. For example, some insurers will often give you lower rates if you have completed an advanced driving course. You may also get a discount if you have winter tires or an alarm system.

Is it Cheaper to be a Secondary Driver?

Yes, it is cheaper to be a secondary driver on an auto insurance policy. However, it’s important that you do not break the law and do something called ‘fronting.’

Fronting is essentially when you lie about who is the primary or secondary driver. It’s typically done when young drivers go as the secondary driver on their parent’s auto insurance, even though the parents don’t use the car.

While this can be tempting, it’s never a good idea. Fronting is insurance fraud and, therefore, a criminal offence.

Final Thoughts

What to look for in an auto insurance policy? Simply put, you should make sure that it’s suitable for your needs and budget. Get coverage for everything you need, and don’t leave yourself vulnerable to the likes of high deductibles.

As a first-time buyer, the payments can be daunting, but sometimes it’s better to pay that little bit extra to get the right policy for you. And it’s important to know exactly what you’re covered for before signing up.

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