Auto Insurance Facts and info for dummies.
We are all dummies when it comes to things we don’t understand, there is no shame in that. Auto insurance is one of those subjects that most of us have far from a sure footing. This is because the concepts and even the mathematics behind auto insurance are far from common day. If you are feeling a little humbled by the “dummy” in our title you might want to try this little example. It is an illustration of how statistics can be counter intuitive and as statistics are an integral part of insurance, especially car insurance it is a good illustration of the complications in understanding the main facts in auto insurance.
Picture a game show where you are asked to choose a door out of three. One leads to a million dollar price the other two to a bucket full of pain falling on your head. Imagine that one of the doors is opened (one you didn’t choose) and it is proven to be one of the bad ones. You still have two doors to open, one of them you chose, one of them is the correct one. Now the game host asks you if you want to choose doors again. If you would like to change your previous choice. Would it affect your chances to win if you changed doors at this time. The surprising answer is yes. Statistics explains why. When you made your first choice you had three doors to choose from and one chance to be right. That gives you a 33.33% of getting it right. Once a door is opened and you have another chance to choose, your chances have increased to 1 in 2 or 50% chances.
This puzzle shows that understanding statistics and problems based on statistics is not always straightforward. What facts should you understand in order not to be a car insurance dummy.
1) Don’t double up insurance coverage.
There is no need to have insurance twice on the same kind of coverage. Sometimes our credit cards, umbrella insurance and employers provide us with insurance. If that is the case make sure your regular car insurance is not a waste of money. If it is not the only insurance cover take it off your car insurance policy.
2) Use deductibles to save money.
Deductibles are a guarantee from the customer to the insurer that the customer will pay for a predetermined amount of each claim. For instance if you contract a $500 deductible you will be required to pay the first $500 of every claim. This shares the risk of a claim with the insurance company reducing the cost of the premium.
3) Make yourself a low risk customer.
Auto and car insurance companies determine the price of an individual’s premium in relationship with the chances of them being involved in a claim. The chances for that to happen are calculated with a statistical study of tremendous amounts of data.
There is no shame in not understanding car insurance, only in not trying. Make the effort to understand the main principles of car insurance and prepare to save money.
Auto insurance and the savings in price comparisons.
Tired of paying more for car insurance than you need to? Scared of reducing your insurance coverage just in case you end up needing it? These are valid worries and intelligent consumers do well to spend time on them. This article will attempt to shed some light on these matters and help you make an educated decision.
Knowing the true price or the fair price of something is not always easy. The very concept of value is quite abstract. For instance how much is a bottle of water worth? In Nicaragua about $0.50 in Spain about $2, in Paris up to $7. These differences reflect the different economies and locations and the effect they have on prices. But what would happen if there were a sever draught and there was no running water. What would happen to the price then? That is a simplistic explanation of what happens to prices depending on the economic forces that drive it.
Auto insurance is especially interesting because it combines a whole variety of driving forces. On the one hand there is the price of providing insurance cover which can change from year to year and customer to customer. On the other hand there is the offer and demand for car insurance and how desperate the auto insurance company is to attract more customers.
Understanding these facts will help you save money on your car insurance. Another factor that will help no end in your pursuit of a good deal is to compare prices with other car insurance companies. Why? Let us analyze some of the most important reasons.
1) Good old competition. Thankfully for consumers there is not a competition on auto insurance and every company is trying to be as competitive as possible. This means that the car insurance companies that need to expand their share on the market will tighten their profit margins to attract new customers.
2) Car insurance companies premium prices change. Car insurance companies are often part of a larger general insurance company. Depending on how the year has worked for the insurance company premiums are priced accordingly. If the house insurance sector of the company has done terribly due to floods in the midwest they will probably have to increase the premiums of other sectors of their insurance cover to offset the losses in the house insurance department and not compromise the profit expectations of the shareholders.
3) It helps you re-assess what auto insurance cover you need. Have you ever noticed what happens when you move home. You realize how much rubbish you don’t need you have. And you find ways to get rid of it. Something similar occurs with auto insurance, you can easily be carrying extra insurance you don’t need or be lacking in key areas of auto insurance cover.
Do you want to have suitable auto insurance cover? Be smart and decide what kind of auto insurance you really need. Then compare prices with at least five major auto insurance companies. You will be surprised with the savings you can make.