Car insurance is a necessary evil for drivers. We all see it as an expense, but few of us understand all the nuances of this complex product. In almost every country, driving without auto insurance is illegal.
So, it’s important to know what you’re buying and how it works. Here are some lesser-known facts about car insurance:
About 2.44% of the Average Household Income Is Spent on Insurance
This may come as a surprise, but insurance is not cheap. In the United States, the average household spends about $800 per year on car insurance premiums. This amounts to about two percent of the average household income. To get a better deal, check websites like CheapInsurance.com for better deals.
Interestingly, this number varies greatly from state to state. In Louisiana, for example, drivers spend an average of $2000 per year on car insurance. In California, however, the average driver spends only $500 per year.
So, what affects your premiums? Insurance companies take a number of factors into account when setting rates, including your driving record, the type of car you drive, how many miles you drive each year, and where you live.
Comprehensive Insurance Isn’t That Comprehensive
Comprehensive insurance is the most expensive type of car insurance. It covers damage to your car that isn’t caused by a collision, such as theft, vandalism, or natural disasters.
However, comprehensive coverage doesn’t always cover everything. For example, it may not cover damage to your car if you hit an animal. So, it’s important to read your policy carefully and know what is and isn’t covered.
In addition, comprehensive insurance usually doesn’t cover damage to your car if you are at fault in a collision. So, if you cause an accident, you may have to pay for the damages out of pocket. It may not include third-party injury or loss of life.
Comprehensive insurance is a good idea for drivers who are at risk of experiencing these types of accidents, but it’s important to understand the limitations of the coverage.
Bad Credit Score May Mean High Premiums
Your credit score is one of the factors that insurance companies use to determine your premiums. A poor credit score can lead to higher rates, while a good credit score can lead to lower rates.
This is because insurance companies see people with bad credit as being more likely to file a claim. So, if you have a poor credit score, you may want to consider purchasing car insurance through a separate company that specializes in high-risk drivers.
It’s important to note that not all insurance companies use credit scores to determine rates. Some companies only look at your driving record and the type of car you drive.
You Can Drive Without Insurance in Some States
Virginia and New Hampshire are the only two states in the United States where you are allowed to drive without car insurance. However, if you get into an accident while driving without insurance, you will be liable for the damages.
In most other states, it is illegal to drive without car insurance. You can face fines and even jail time if you are caught. So, it’s important to have car insurance if you live in one of these states.
Intentional Damage Isn’t Covered by Most Policies
If you cause an accident on purpose, your car insurance policy will not cover the damages. This is known as intentional damage.
Intentional damage can include deliberately crashing your car into another vehicle or driving into a wall on purpose. It can also include getting into a fight with another driver and causing damage to their car.
Insurance is a complex product, and there are many things that drivers don’t know about it. These are just a few of the lesser-known facts about car insurance. Be sure to do your research before purchasing a policy so that you know what you’re getting.