Is car insurance paid a month in advance
Accident: A sudden, fortuitous event or an unexpected, unforeseen event, not under the control of an insured and resulting in a loss. Often used to refer to a collision or insurance event. See What to do after a car accident
Accident Forgiveness: In most states, customers who have not had an at-fault accident in the previous five years qualify for this program. Accident forgiveness means that some insurance carriers won't add a surcharge to your premium after your next at-fault accident. See Accident forgiveness: What's the catch?
Accident Frequency: The number of times an accident occurs. Used by actuaries (see definition below) to predict losses and appropriately base premiums.
Accidental Death Benefit (ADB): A supplementary life insurance policy benefit that provides a death benefit in addition to the policy’s basic death benefit if the insured’s death occurs as the result of an accident.
Act of God: Natural occurrence beyond human control or influence. Such acts of nature include hurricanes, earthquakes, and floods. See Acts of God and your car insurance
Actual Cash Value: The fair market value of property; technically, replacement cost less depreciation.
Actuary: A statistician who computes insurance risks and premiums. Actuaries keep insurance carriers profitable and financially stable by setting prices, assessing trends, and determining how much to hold in reserve to pay claims.
Additional Insured or Additional Interest: A person or an organization, other than the named insured or covered person, who is protected under the named insured's auto policy.
Adjuster: See Claim Adjuster.
Admitted Company: An insurance company authorized to do business in the state.
Adverse Carrier: Term used to refer to the other party's insurance company.
Adverse Selection: The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk.
Aftermarket Parts: Parts or accessories that are not a part of the original factory installed parts.
Agent: An individual who acts as a representative for the company and sells insurance, usually on a commission basis. This individual could be an 'exclusive' or 'non-exclusive' agent.
Agreed Price: The price or cost of repairs agreed to by the Auto Damage adjuster or independent appraiser and the body shop representative.Agreed Value: A type of policy available for collectible, antique or custom vehicles that do not depreciate in value as the average car does. At the inception of your policy, you and your insurance company come to an "agreed value" for your vehicle and that is what will be paid out in the event of a total loss instead of actual cash value. See Auto insurance for collectible cars
Alien Insurance Company: An insurance company incorporated under the laws of a foreign country.
Amendment: A change to the basic policy contract. An amendment alters the policy; an endorsement (see definition below) adds to it.
Anti-Lock Braking system (ABS): A computer-controlled high pressure system that assists the vehicle's normal braking system. ABS allows all wheels to slow at the same rate, thereby preventing loss of control.
Anti-Theft Device: Devices designed either to reduce the chance an auto will be vandalized or stolen, or assist in its recovery. Examples include car alarms, keyless entry, starter disablers, motion detectors, parts of the vehicle etched with the Vehicle Identification Number, and recovery systems.
Application: A signed statement by a prospective insured requested insurance. This can be signed electronically.
Appraisal: Process that determines the value of property, or the extent of damage, usually performed by an impartial expert.
Arbitration: A process of settling a dispute through an impartial party. It is used as an alternative to litigation.
Assigned Risk: A driver or vehicle owner who cannot qualify for insurance in the regular market. He or she must get coverage through a state assigned-risk plan, which specifies that each company must accept a proportionate share of these drivers/owners.
Assured: Means the same as an insured, policyholder, or someone who has an insurance policy.
At-Fault: The party that is legally liable for the damages in an accident.
Auto Damage Adjuster: The auto damage adjuster is responsible for writing the repair estimate for your vehicle. This adjuster will also answer your questions about the repair process, your rental vehicle, or your total loss settlement.
Auto Damage Division: Division of a claims department that handles auto claims.
Auto Repair/Claim Repairs: Insurance carriers have programs that maximize convenience when you have an auto insurance claim. It allows you to complete your vehicle's repair process at one location. Some CarInsurance.com carrier's claims adjusters are on site to facilitate the repair process. Rental vehicle arrangements are available on-site through a rental car agency.
Auto Theft: The theft of an auto is a type of loss that is covered under comprehensive coverage.
Automobile Insurance: A form of insurance that protects against losses involving autos. Auto insurance provides protection from losses resulting from owning and operating an auto. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating an auto.
Automobile Insurance Plans: The name for "assigned risk" plans. These are plans set up and monitored by the state to help people who are unable to secure auto insurance through standard insurance carriers. See Assigned Risk.
Automobile Insurance Premium Discounts: Discounts offered to drivers for such safeguards as air bags, seat belts, good driving record, anti-theft devices, multiple vehicles, training courses, good grades, group membership, employment or degrees, pre-purchasing, low mileage, and renewal or prior insurance.
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Basic Auto Policy: Although still used today to insure substandard risks, two-wheel motorized vehicles, and commercial autos, the Basic Auto Policy has been primarily replaced by the Personal Auto Policy, which combines both physical damage coverage and liability insurance for claims arising out of the ownership or use of a vehicle.
Binder: A temporary agreement declaring that the policy is in effect. Used in certain cases to protect a policyholder when it is not possible to issue or endorse the policy immediately.
Blue Book: A publication used for the determination of values for used automobiles and trucks. The full name of the publication is Kelley Blue Book.
Bodily Injury: An injury sustained by a person.
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Cancellation: Termination of an insurance contract before the end of the policy period, by the insured or insurer.
Car Insurance: A form of insurance that protects against losses involving cars. Car insurance provides protection from losses resulting from owning and operating a car or vehicle. The insurance covers losses to the insured's property and losses for which the insured is liable as a result of owning or operating a car.
Carrier: The insurance company or insurer.
Catastrophe: A disaster affecting a specific geographic area. Catastrophes often cause injury or even death; most result in extensive property damage. Hurricanes, floods, tornadoes, and even large hailstorms are typical examples of catastrophes.
Certificate of Financial Responsibility: Depending on the state and Motor Vehicle requirement, this is a form certifying that specific coverage has been purchased to meet the state's Financial Responsibility laws. This could be an SR-22, FR-44, SR-50, or any other State Requirement certification form.
Certificate of Satisfaction: A form signed by the insured when he or she takes delivery of the car from the repairer. It certifies that he or she is satisfied with the vehicle operations, appearance, and visible quality of the repairs.
Claim: Any request or demand for payment under the terms of the insurance policy.
Claim Adjuster: A person responsible for investigating and settling a claim.
Claimant: Individual or entity presenting a claim.
Clause: A section in an insurance policy that explains, defines or clarifies the conditions of coverage.
CLUE® Report: Comprehensive Loss Underwriting Exchange (CLUE) report; provides claim history information.
Combined Single Limit: Bodily Injury and Property Damage coverage expressed as one single amount of coverage.
Commercial Lines: Products designed for and bought by businesses. CarInsurance.com offers Business Auto Policies and Commercial Auto Policies.
Commission: That portion of the premium paid to the agent as compensation for the agent's services.
Comparative Negligence: A doctrine of law that, in some states, may enable claimants to recover a portion of their damages even when they are partially at fault, or negligent. Each party's negligence is compared to the others and a claimant's recovery can be reduced by the percentage of his or her own negligence.
Competitive Auto Repair Parts: Parts made by a company other than the manufacturer of the auto. Parts meet or exceed the quality of the manufacturer's parts, but cost less. Most insurance carriers guarantee these parts for as long as you own the car.
Competitive Estimate: A term used when an insurance company requests that you submit multiple repair estimates for consideration.
Conditions: The portion of the insurance contract which outlines the duties and responsibilities of both the insured and the insurance company.
Condo Insurance: A type of homeowner's insurance that meets the special needs of condominium owners.
Continuous Coverage or Continuous Liability Insurance: Continuous coverage refers to the length of time you have maintained insurance on your vehicle.
Contract: A legal agreement between two parties promising a certain performance in exchange for a certain consideration.
Contributory Negligence: A doctrine of law that, in some states, may prevent claimants from recovering any portion of their damages if they are even partially at fault, or negligent.
Coverage: Protection and benefits provided in an insurance contract.
Covered Person: This refers to the individuals (named insured, spouse, resident relatives, etc.) insured under a policy contract.
Customized Equipment/Special Equipment: Items not included in standard insurance options available for cars. These may include extra electronic equipment, special paint or exterior items, or amenities added to the inside of a van or truck.
Customized Vehicle: A vehicle that has been altered or has equipment or accessories not typically found in a personal vehicle.
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Damage: Loss or harm to a person or property.
Declaration Page: That page of the insurance policy which lists the insurance company, its address, name of the policyholder, starting and ending dates of coverage, and the actual coverages given in the contract, including the covered locations and amounts.
Declarations: The part of your policy that includes your name and address; the property that is being insured, its location and description; the policy period; the amount of insurance coverage and the applicable premiums.
Deductible: Usually, a dollar amount the insured must pay on each loss to which the deductible applies. The insurance company pays the remainder of each covered loss up to the policy limits.
Defensive Driver Course: These are classes either offered through or approved by Departments of Motor Vehicles to enhance driving skills. These courses may make drivers eligible for discounts on their premiums. Courses taken for traffic school because of a moving violation are not eligible.
Defensive Driver Discount: Certain drivers (usually over age 50) who have voluntarily taken a defensive driving course may qualify for this discount on their auto insurance premiums.
Depreciation: The decrease in value of any property due to wear, tear, and/or time. Generally, depreciation is not an insurable loss.
Discount: A reduction in your premium if you or your car meets certain conditions that are likely to reduce the insurer's losses or expenses. For example, auto insurance discounts are given for cars with auto theft devices and for drivers and passengers who use seat belts.
Domestic Insurance Company: An insurer domiciled in this state.
Drive-In Claims Office - Concierge Claims Service: An office or location that allows drivers to have simple, one-stop access for claims coverage.
Drive-Other-Car Endorsement: Optional coverage that broadens the definition of a covered auto to include non-owned vehicles the insured person operates.
Driver Education: State accredited educational course that consist of at least 30 hours of professional classroom instruction.
Driver Improvement Course: A voluntary refresher course available for drivers age fifty-five (55) and older to enhance their driving skills.
Driver Training: State accredited training course that consists of time spent behind-the-wheel with professional instruction.
Driver Training Discount: A discount for people who have taken an approved driver training course. This discount is not available in all states or for all individuals.
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E-Bill: An electronic version of your bill that you can review online. Most utility services and banks offer these services. Some CarInsurance.com insurance companies offer this ability.
E-Commerce/Electronic Commerce: The sale of products such as insurance over the Internet
Earned Premiums: The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires.
Economic Loss: Total financial loss resulting from the death or disability of a wage earner, or from the destruction of property. Includes the loss of earnings, medical expenses, funeral expenses, the cost of restoring or replacing property and legal expenses. It does not include noneconomic losses, such as pain caused by an injury.
Effective Date: The date that coverage begins on an insurance policy.
Electronic Funds Transfer (EFT): EFT is an electronic payment method that lets you pay your premiums with automatic deductions from your checking account.
Emergency Road Service Coverage: Protection for problems that are not typically handled but your auto insurance, such as: being locked out of your car, towing not related to an accident, having a dead battery re-charged, inflating a flat tire, filling an empty gas tank. (Also referred to as Towing and Labor)
Endorsement: A document, which is attached to the policy and modifies or changes the original policy in some way.
Estimate: As assessment of the cost to repair your damaged property.
Exclusion: Section of the insurance policy, which list property, perils, person, or situations which are not covered under the policy.
Experience: Can refer to many items such as driving record history or record of losses.
Experience Rating: Determination of the premium rate for an individual risk, made partially or wholly on the basis of that risk's own past claim experience.
Expiration Date: The date your coverage ends. There is usually a time of day associated with this date, for example, an expiration date of 5/1/2002 at 12:01am. This means your coverage ends one minute after midnight on the date listed.
Exposure: Possibility of loss. Insurance companies set rates based upon exposure.
Extended Non-Owner Liability: An endorsement that provides broader liability coverage for specifically named people operating any non-owned automobile or trailer. It covers non-owned autos, use of autos to carry people or property for a fee, and individuals driving employer-furnished cars who do not own vehicles themselves.
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Family Automobile Policy: Now replaced by the Personal Auto Policy, the Family Auto Policy was a package policy in which both liability and physical damage protection to an insured's vehicle was offered on one policy.
Field Adjuster: An insurance adjuster who works primarily outside of an office and often meets personally with the public. Field adjusters can conduct face-to-face meetings, negotiations with claimants, scene investigations, and damage inspections.
Financed Car: A vehicle financed by a loan. The lender retains a lien on the auto until it has been paid off.
Financial Ratings: Financial ratings reflect a rating organization's opinion on the financial strength and ability to meet ongoing obligations to policyholders. The ratings organizations most commonly identified with the insurance industry are AM Best, Standard & Poor's and Moody's.
Financial Responsibility Law: Financial responsibility laws require owners and operators of autos to maintain enough money to compensate those they injure. Liability insurance is the most common way to satisfy these requirements.
First Party: Term used to refer to an insured.
First Party Benefits: This pays policyholders and others covered by the policy in the event of injury, no matter who caused the accident. The benefits can include medical expenses, loss of income, funeral and death benefits. This may also be called Personal Injury Protection.
First Party Claims: A claim for damage, loss or injury made by an insured.
Flat Rate Cancellation: Termination of an insurance contract at inception. This policy is never in effect.
Forced Placed Insurance: Insurance purchased by a bank or creditor on an uninsured debtor's behalf to cover the property, so that the creditor receives payment if the property is damaged or destroyed.
Foreign Insurance Company: An insurer domiciled in another state.
Forms: This can be any part of your insurance policy. This may be an SR-22 form or a policy form like your application, declaration page or policy jacket. Typically, all are available in Adobe's PDF format.
Fraud: A false statement intended to deceive the insurer and induce it to part with something of value or surrender a legal right. May void a policy.
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Gap Insurance: If you are making lease or loan payments and you experience a total loss, there may be a difference (gap) between the market value of your vehicle and what you still owe on it. This optional coverage pays the difference.
Garage Location: The zip code where your vehicle is parked when not in use and usually corresponds to your primary residence.
Good Student Discount: May be awarded to full-time students who maintain a grade average of "B" or better. Each carrier has specific rules that may apply.
Guarantee Funds: All 50 states, the District of Columbia and Puerto Rico require licensed insurers to assume some of an insolvent insurance company's policyholder liabilities. These funds are used to bail out the policyholders of companies that fail.
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Hazard: Anything that increases the chance of an accident occurring.
Hit and Run: An accident caused by someone who does not stop to assist or provide information.
Homeowners Insurance: Protects homeowner's from losses to their homes, personal property, and some types of damage or injury to others for which the homeowner is liable. Homeowner's insurance is subject to the terms, limits and conditions of your policy contract.
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ID Card: A card issued by your insurer containing basic information about your insurance policy. Some states require you to keep an ID card in your vehicle.
Inception Date: The date that coverage begins on an insurance policy.
Indemnification: The act of providing compensation for a loss with the intent to restore an individual or entity to the approximate financial position prior to the loss.
Indemnity: A principle of insurance which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better, no worse.
Independent Adjuster: An individual who estimates losses on behalf of an insurance company, but is not an employee of that company.
Inspection: Verification of a vehicle's physical condition.
Insurable Interest: Exists when an individual would suffer an economic loss as the result of damage to property or bodily injury.
Insurance: Insurance is a system in which groups of people who have similar chances of suffering a loss transfer their risk of loss to an insurer who pools the risk of many people together. In exchange for payment of premium, the insurer promises to reimburse the person for their covered losses.
Insurance Fraud: The act of falsifying or exaggerating the facts of an accident to an insurance company to obtain payment that would not otherwise be made. Common types of insurance fraud are staged accidents, exaggerated injuries, and inflated medical bills.
Insurance Score: Confidential ratings used for underwriting in some states as a rating tool. It may include information about the consumer's payment history, the number of open accounts and if bankruptcy has been filed. It is a measure of how financial affairs are managed and does not include assets, income information or race information.
Insured: A person or organization covered by an insurance policy.
Insurer: An organization that provides insurance.
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Joint Underwriting Association/JUA: Insurers which join together to provide coverage for a particular type of risk or size of exposure, when there are difficulties in obtaining coverage in the regular market, and which share in the profits and losses associated with the program. JUAs may be set up to provide auto and homeowners insurance and various commercial coverages, such as medical malpractice
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Lapse in Coverage: A point in time when a policy has been canceled or terminated for failure to pay the premium, or when the policy contract is void for other reasons.
Leased Vehicle: A vehicle rented under a long-term contract (lease). The leasing company retains ownership of the vehicle and must be shown on your insurance policy as an insured. See also: gap insurance.
Legal Liability: Liability imposed by law, as opposed to liability arising from an agreement or contract.
Lender: Your lender is the institution to which you make car payments.
Lessor: Your lessor is the institution to which you make your lease payments.
Liability: Any legally enforceable obligation or responsibility for the injury or damage suffered by another person.
Liability Adjuster: The liability adjuster handles the investigation of the accident. These adjusters' responsibilities can include collision payments, property damage payments, and bodily injury settlements. In some states, these adjusters may also handle the medical portion of your claim.
Liability Insurance: Insurance providing money on behalf of the policyholder to pay because of bodily injury or property damage caused to another person and covered in the policy.
Liability Investigation: The process of gathering information to determine the cause of an accident.
Lien: A claim, charge, or encumbrance on property as a security for the payment of a debt.
Lien holder: A person or organization with a financial interest in property up to the amount of money borrowed or still owed on the property.
Limit: The maximum amount of protection purchased by the insured for a specific coverage.
Limits of Liability: The maximum amount of insurance the insurance company will pay for a particular loss, or for a loss during a period of time.
Line of insurance: The type or kind of insurance such as personal lines, life insurance or homeowners
Loss: Any measurable dollar cost of damage and/or injury suffered by a person.
Loss of Use: Compensation to a third-party claimant for financial consequences resulting from the inability to use property as the result of accident-related damage.
Loss Payee: A person or entity with a legally secured insurable interest in another's property, usually a financial institution that loaned money to buy a car. The car is the loan collateral. If the auto is damaged in an accident, loss payments will be made to you and to the loss payee on your policy.
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Malicious Mischief: Intentional damage of personal property with malice of forethought.
Material Damage: All property-related damage losses covered by the policy. This includes the following: Property Damage (PD), Comprehensive damage (COMP), Collision damage (COLL), Fire/Theft Combined Additional Coverage (FTCA), Rental Reimbursement (RREUN), or Uninsured Motorist Property Damage (UMPD).
Material Misrepresentation: The policyholder / applicant makes a false statement of any material (important) fact on his/her application. For instance, the policyholder provides false information regarding the location where the vehicle is garaged or fails to disclose all the residents in a household.
Mechanical Breakdown Insurance: Covers repairs to all mechanical parts of the car.
Medical Adjuster : The medical adjuster is responsible for reviewing all medical bills, replacement/essential services, and lost wages submitted to the company for injuries sustained by you and/or the passengers in your vehicle (depending upon the state in which you live and the coverage on your policy).
Medical Payments Coverage: Pays medical expenses related to an automobile accident. This coverage is subject to the terms, limits and conditions of your policy contract.
Minimum Limits of Liability: The least amount of liability coverage that can be purchased, which is generally equivalent to the minimum amount required by state law. In determining rates, a carrier will use the basic limits to develop the base rates. If an insured person wants higher limits, the carrier applies an increased limits factor to the base rate in calculating the new premium for the increased coverage.
Misrepresentation: To make written or verbal statements that is untrue or misleading.
Motor Vehicle Record (MVR): A report from the agency that issues your driver's license, listing accidents and violations that appear on your driving record. This report is used to verify information provided by insurance applicants and policyholders.
Motorcycle Safety Foundation (MSF): An international non-profit organization dedicated to motorcycle safety training, research and awareness. Some applicants who complete MSF courses qualify for discounts for motorcycle insurance.
Multi-car discount: A discount offered by some insurance companies for those with more than one vehicle insured on the same policy. In some cases, if you drive a company car insured by your company, your own insurance company may give you the multi-car discount.
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Named driver exclusion: Endorsement on your auto policy that excludes a particular driver who has access to your car from coverage.
Named Insured: Any person, firm or corporation designated by name as the insured person(s) in a policy. Others may be protected by policy definition even though their names aren't on the policy, such as other drivers operating (with consent) the named insured's covered auto.
Named Non-Owner Policy: A policy endorsement for one who operates any non-owned automobile on a regular basis, such as driving a car provided by one's employer.
National Insurance Crime Bureau (NICB): A not-for-profit organization that partners with insurers and law enforcement agencies to facilitate the identification, detection, and prosecution of insurance criminals. The NICB receives support from over 1,000 property/casualty insurance companies.
Negligence: The failure to exercise the care that is expected of a reasonable person in similar circumstances.
No-Fault Insurance: May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. This coverage is subject to the terms, limits and conditions of your policy contract and is not available in all states.
No-Loss Form: A statement that is a signed form telling the insurance company there have not been any losses since a certain date. The document usually includes a cancellation date, expiration date, and reinstatement date. etc.
Non-Owned Auto: Any vehicle that is not owned, borrowed, or leased by the insured, and which is used primarily for a business purpose.
Non-Owner Car Insurance: A policy providing liability coverage to a driver who does not own a vehicle, used to avoid gaps in continuous coverage, provide rental-car liability or to satisfy state requirements to reinstate a driver's license or SR-22 filing.
Non-Renewal: When an insurer decides not to renew a policy at the end of its policy period.
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Occasional Driver: The person who is not the primary or principal driver of the vehicle.
Occurrence: An event, or repeated exposure to conditions, which unexpectedly causes injury or damage during the policy period.
Original Equipment Manufacturer Parts: Auto parts obtained from the original manufacturer of the car or the supplier of the original part.
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Passive Restraint System: A passenger safety system, such as an air-bag, that activates automatically in the event of an accident.
Payment Plans: Your auto insurance premium can be paid using one of our installment payment plans; you make several smaller payments but incur a service fee.
Payment Recovery: If your car is damaged because of another driver's negligence and you ask your insurance carrier to settle the claim for damage to your vehicle, we will seek to recover your deductible and our payments from the other party. This process of payment recovery is also called subrogation.
Per Occurrence Limit: This refers to the cap amount an insurance company will pay for all claims arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by all parties. When Bodily Injury coverage is purchased in split limits, the second limit is the "per occurrence" limit: e.g. $100,000(per person)/$300,000(per occurrence)
Per Person Limit: This refers to the cap amount an insurance company will pay for any one person's injuries arising from a single incident. In an automobile accident, it comprises bodily injuries sustained by each person. When Bodily Injury is purchased in split limits, the first limit is the "per person" limit: e.g. $100,000(per person)/$300,000(per occurrence)
Peril: A danger or hazard that can cause a loss, for example, a car collision with an object, or a fire.
Personal Auto Policy: The most common auto insurance policy sold today. Often referred to as "PAP," this policy is written in simple wording and provides coverage for liability, medical payments, uninsured/underinsured motorist coverage, and physical damage protection.
Personal Injury Protection: May pay for your medical treatment, lost wages, or other accident-related expenses regardless of who caused the accident. This coverage is subject to the terms, limits and conditions of your policy contract
Personal Property: Property that is not land or connected to land (real estate), such as furniture or jewelry.
Physical Damage: Damage to your covered vehicle from perils including (but not limited to) collision or upset with another vehicle object, fire, vandalism and theft.
Physical Damage Coverage: Pays for damage to your car this could be through Collision Coverage or Comprehensive Coverage (Also referred to as Other Than Collision)
Policy: The written documents of a contract for insurance between the insurance company and the insured. Such documents include forms, endorsements, riders and attachments.
Policy Change: Any change made to your insurance policy during the period that the policy is in force.
Policy Lapse: A point in time when a policy has been canceled or terminated for failure to pay the premium, or when the policy contract is void for other reasons.
Policy Limit: The maximum amount a policy will pay, either overall or under a particular coverage.
Policy Period: The period of time in which a policy is in effect. (For example, six months or one year).
Policy Term: The length of time that the policy is in force. Most companies offer annual and semi-annual policies.
Policyholder: One who maintains ownership in an insurance policy. This may refer to the policy owner or those covered under the policy. See also Named Insured.
Pre-accident Condition: The state of the vehicle before the accident, including damage not related to the accident, mileage, options, and other factors.
Preferred Risk: Any risk considered to be better than the standard risk on which the premium rate was calculated.
Premium: The price of insurance an insured person pays for a specified risk for a specified period of time.
Premium Financing: When a policyholder contracts with a lender to pay the insurance premium on his/her behalf. The policyholder agrees to repay the lender for the cost of the premium, plus interest and fees.
Primary Insurance: Insurance that must be maintained as a condition of the most Personal Umbrella Policies. Primary insurance acts as the first layer of coverage on common types of losses. This usually includes auto, motorcycle and homeowner insurance, but may also include boat insurance, commercial liability or some other policy. Please check your insurance policy documents for more detailed information.
Primary Use: What your vehicle is mainly used for (pleasure, to and from work, business, commercial, or farm).
Principal Driver: The person who drives the car most often.
Private Passenger Automobile: A four-wheeled motor vehicle that is subject to motor vehicle registration and used for private personal use.
Private Passenger Autos: Ordinary cars, station wagons and jeeps, utility autos (pick-ups, panel trucks and delivery vans of 1,500 lbs. or less, not used commercially) and utility trailers designed to be pulled by a private passenger auto.
Pro Rata Cancellation: Termination of an insurance contract before the policy expiration date on which the premium returned to the insured person is adjusted in proportion to the amount of time the policy was in effect.
Proof of Loss: A statement made regarding the extent of the claim; it may be requested in accordance with the conditions of the policy.
Property Damage Liability Coverage: Pays for damage to someone else's property resulting from an accident for which you are at fault and provides you with a legal defense. This coverage is subject to the terms, limits and conditions of your policy contract.
Proximate Cause: An act or omission initiating an unbroken sequence of events resulting in injury to a person or damage to property.
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Quote: A statement of the premium that will be charged for insurance coverages based on specific information provided by the person requesting the quote including drivers, vehicles, and driving record.
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Rate: Often used as a synonym for premium but actually refers to the base rating units that are used to determine the final premium.
Rating Plan: The rules that determine the cost of your insurance premium. These rules modify the base rates by applying discounts and surcharges based on your personal characteristics, for example, using your seat belt,
Rebate: A reduction of a premium.
Red Book: A publication used for the determination of values for used automobiles and trucks.
Reinspection: A review of an estimate or appraisal done by an adjuster during or after repairs to a vehicle. This is done to guarantee the accuracy of staff or independent auto damage personnel, and to guarantee that the work required in an estimate or appraisal is being completed by the body shop.
Reinstatement: The restoring of a cancelled policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest. They may also require a signed no-loss form.
Reinsurance: A form of insurance that insurance companies buy for their own protection, used and required to pay for losses and claims.
Release: Legally binding contract stating that all obligations past, present or future arising from a particular accident or occurrence have been fulfilled.
Renewal: The process of keeping an active policy in force through the issuance of a renewal policy.
Renewal Date: The date that your insurance policy expires and the date that your renewed policy will begin.
Rental Reimbursement: Optional coverage that helps pay rental vehicle costs when your insured vehicle is disabled as the result of a covered accident or loss. Available to most policyholders for an additional premium.
Renter's Insurance: Insurance that provides protection from losses that arise out of the rental of a home. Protection covers losses to the insured's property, not to losses that occur as a result of owning a home.
Replacement Cost: The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. This will pay the full cost to repair an item or buy a new one to replace the damaged item.
Replacement Parts: Several types of parts may be used when your vehicle is repaired: new parts, both original equipment manufacturer and after-market; and recycled parts. New or after-market parts will be used if a carrier can't find like-kind and quality recycled parts. A 5-year-old car, for instance, would be repaired with parts at least as good as the parts that had been in the car.
Replacement Value: The full cost to repair or replace the damaged property with no deduction for depreciation, subject to policy limits and contract provisions.
Resident Adjuster: Staff adjuster who handles claims in remote areas of a region.
Rider: In motorcycle insurance, a rider is someone who will operate the insured motorcycle. In life and health insurance, the term "rider" is often used to refer to an endorsement to an insurance policy.
Risk: The chance of suffering a loss.
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Safe Driver Plan: A rating system that assigns points for traffic convictions and certain accidents. Similar to a merit-rating plan, each point increases the surcharge percentage to the baseline rates.
Salvage Title: A title of ownership on a car that was once deemed a total loss by an insurance company, but has since been repaired and allowed back on the roadways.
Select Repair Shop: Body shops chosen by your insurance carrier that are authorized to handle the repair of insured vehicles without the need for an inspection by an assigned adjuster. Vehicle owners should always have the right to choose the body shop of their choice.
Self-Insured Retention: In umbrella insurance, self-insured retention is similar to a deductible in other types of insurance. The self-insured retention is the amount of damages for which the policyholder is responsible before the umbrella coverage begins to cover a loss.
Short Rate Cancellation: A policy termination in which the refunded premium is not proportional to the amount of time remaining in the policy period due to the fixed expenses incurred by the company. The insured will generally pay more for each day of coverage than if the policy had remained in force throughout the entire policy period.
Special Investigation Units: Your insurance carrier helps fight fraud through its special investigation unit, staffed with experts in fraud detection and investigation. Sounds official.
Split Limit: Any insurance coverage with separately stated limits for different types of coverage. Example: an automobile liability policy of 100/300/50 provides a maximum of $100,000 bodily injury coverage per person, $300,000 bodily injury coverage per accident, and a property damage limit of $50,000 per accident.
SR-22: An SR-22 (CFR) is a certificate mandated by the state to verify that an individual is maintaining auto insurance liability coverage. If a person needs an SR-22 (CFR), they will usually be notified by their state's Motor Vehicle Department.
Stacking of Limits: The application of more than one policy limit to the same loss or occurrence. In some jurisdictions, courts have required stacking of limits when multiple policies, or multiple policy periods, cover an occurrence. For example, Uninsured motorist bodily injury limits of $100,000/300,000 on two policies owned by the same person may be added together to pay a loss. In this event, the total amount of coverage available for an accident would be $200,000/600,000.
Staff Adjuster: A non-contract or per-job adjuster that is typically employed by your insurance carrier to handle claims.
Subrogation: If your car is damaged because of another driver's negligence and you ask your insurance carrier to settle the claim for damage to your car, we will seek payment recovery (including your deductible) from the other party. This process of payment recovery is called subrogation.
Supplement/Supplemental Estimate: Used to cover damage not included in the original estimate. Most claims settlements do their best to estimate costs, if they are wrong you are entitled to any additional money to settle your claim. This is paid with a supplement.
Surcharge: An extra charge applied by the insurer. For automobile insurance, a surcharge is usually charged for items like accidents, moving violations, or specific risks not handled by normal rating factors.
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Term: The length of time for which a policy or bond is in force.
Theft: The unlawful taking of another's property with the intent to permanently deprive the owner of its use or possession.
Third Party: Person or entity not party to an agreement but with an interest in the agreement.
Third Party Claim: Claims for injury or damage to property of a third party alleged to have been caused by the insured.
Threshold Level: Under some no-fault insurance laws, the threshold level represents the degree of injury a claimant must establish before being allowed to sue the negligent party. The threshold may be verbal (regarding the severity of the injuries) or a dollar amount ($10,000), or both. For example, with a threshold of $5,000, an injured person may sue if his/her injuries and other economic damages (rehabilitation expenses, loss of income, etc.) exceed $5,000.
Tort: A private wrong or harm (other than a breach of contract) committed against another, resulting in legal liability. A tort is either intentional or accidental (negligent). Automobile liability insurance is purchased to protect one from suits arising from unintentional torts.
Tort Feasor: One who commits a tort (see the definition of tort).
Total Loss: The condition of an automobile or other property when damage is so extensive that repair costs would exceed the value of the vehicle or property.
Towing and Labor Costs: This endorsement, which is added to the physical damage coverage, provides reimbursement up to a specified limit to tow your vehicle or pay for on-site labor costs.
Transportation Expenses: Subject to a daily and maximum dollar limit, this coverage (under the physical damage portion of an automobile policy) pays for transportation expenses incurred by the named insured only in the event of theft of an entire covered auto. Coverage generally begins after a stated minimum waiting period.
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Umbrella Insurance: Provides high limits of additional liability coverage above the limits of your homeowner's and auto policy. In addition, it provides coverage that may be excluded by other liability policies.
Underinsured: The result of the policyholder’s failure to buy sufficient insurance. An underinsured policyholder may only receive part of the cost of replacing or repairing damaged items covered in the policy.
Underwriting: The process an insurer goes through to determine whether or not it will provide coverage for an applicant.
Unearned Premium: The portion of your premium remaining on your policy term. For example, with a six-month premium, at the end of the first month of the premium period, five-sixths of the premium is unearned by the insurance company.
Uninsured Motorist Coverage: A type of car insurance coverage that protects you if you're hit by a driver without insurance. If you don't have uninsured motorist, and you're hit by an uninsured driver, you may need to pay out of pocket for damages to your car.
Unsatisfied Judgment Fund: Some states have established laws to reimburse those injured in auto accidents that have been unable to collect from the responsible party.
Usage: This refers to the primary function or purpose in which you intend to operate your vehicle. For example, if you primarily drive your car to and from work, the usage is considered "commute; "if you're self-employed and you primarily drive to see customers, the usage is considered "business;" if you're retired, your usage is considered "pleasure."
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Vandalism: Destruction or defacement of property.
Vehicle Identification Number (VIN): A 17-digit number assigned to each vehicle manufactured in the United States after 1980. This number is used for identification purposes and is visible on the dashboard when viewed from the outside of the car. It indicates many identifiers including make, model, options, and year in official records (like a Social Security number for your car).
Void: A policy contract that for some reason specified in the policy becomes free of all legal effect. One example under which a policy could be voided is when information a policyholder provided is proven untrue.
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Waiver of Collision Deductible: This option pays your collision deductible when you carry collision coverage on a vehicle that is damaged by an uninsured or hit-and-run motorist who is at fault. Coverage applies only when there is actual physical contact and when you can identify the uninsured driver or vehicle.
Whole Dollar Premium: Generally, insurance premiums are rounded to the nearest dollar; an amount of 51 cents or more being rounded up to the next dollar, and any amount less than that the cents are dropped.
We originally started out with the 3 best ways to get cheap car insurance however our customers wanted to know even more ways. So we have compiled a list of 25 ways to get cheap car insurance below.
1. Comparison Shop
Finding the most affordable car insurance isn’t as hard as it once was. With so many different car insurance agents located all around the country, and some available exclusively online, your options are now more plentiful than ever before. The hard part is sorting them out in order to make sure you are getting the most affordable rates while still maintaining the exact amount of coverage you need.
The first thing you should do when looking for cheap car insurance is comparison shop. Consult your area’s local phone book, call or visit agencies near you, and remember to take notes regarding prices.
Next you’ll want to do some online research to find out your online car insurance options. Again, take notes and compare these to the notes you have concerning local agents.
Finally, ask your friends and family members what insurer they use, and ask for any recommendations or warnings they may have about other agencies. You’re sure to receive an unbiased opinion every time.
2. Age-Based Discounts
Many younger drivers may not realize this, but your age is an important factor in setting the exact price of your auto insurance premium. You’ll typically see premiums lowered once you hit the age of 25, with discounts that can sometimes be as high as 20%, though other factors such as marital status and driving record are also taken into consideration.
The lowest premiums associated with cheap car insurance rates are typically given to drivers between the ages of 25 and 55. This age group is considered to be amongst the safest drivers on the road; certainly safer than teenagers and elderly drivers.
3. Move to a Lower-Crime Area.
The location of your home as well as your daily commute to the workplace is also taken into consideration by insurance agents when determining your car insurance premiums. This is a factor for a number of good reasons.
Individuals who live and park their car in wealthy neighborhoods are statistically less likely to have their car stolen, broken into, or damaged while it is parked overnight. Secondly, those who have shorter commutes to and from work are statistically less likely to be involved in an accident as they spend less time on the road than drivers with longer commutes.
4. Consider Getting a Different Vehicle if Savings Warrant it
Did you know that insurance on a honda can be more expensive than insurance on a Jaguar?
The exact make and specific model of your vehicle is also used to determine how much you pay for cheap car insurance. This information is important to your insurance agent for a number of reasons.
RELATED: Technology a Big Problem for Vehicle Reliability
The newer the car, the higher the repair/replacement cost.
On the other hand, some vehicles are simply more reliable than others. A used vehicle that’s been on the road for 20 years is not nearly as reliable as a brand new car. Though it may be more affordable to buy the older, used car, you may wind up paying higher insurance rates because of it.
Owners of sports cars and luxury vehicles can also expect higher premiums than most other drivers.
5. Increasing Your Deductible Can Save You $100’s a Year
A deductible is the amount of money you are actually required to pay out in the event of an accident before your insurer will pay out on your claim. The amount of your deductible is also one of the biggest factors in determining your auto insurance premiums. In fact, the larger this deductible is, the less you’ll have to pay for coverage on a month-to-month basis.
Most drivers don’t realize this, but most agents will actually allow you to raise the deductible amount in order to lower your monthly rates. If you’re looking for cheap car insurance then this is a good deal for you; especially if you have a clean driving record as you may not ever have to actually pay this deductible.
6. Consolidate Your Policies With One Company
If you currently have multiple insurance policies through several different companies then you may be able to consolidate them so you just have to deal with one insurance agent. For example, many individuals have separate policies on their house, their car, and maybe even a boat or recreational vehicle.
Combining all of these separate policies into one, or at least choosing one company to handle all of your policies, can eliminate a number of hassles. It can also lower the amount of money you pay each month for insurance all around.
7. Check For Multiple Vehicle Discounts
Many individuals own multiple cars, and most of these owners keep insurance on all of their vehicles year round. Others may own seasonal cars, show cars, or other vehicles that are only brought out on rare occasions.
If you own multiple vehicles for whatever reason, you can consolidate them all onto one insurance policy when looking for cheap car insurance. The benefits of this include less paper mail being sent to your house as well as a reduction in your insurance premiums each month.
Multiple drivers can also be added to an insurance policy, allowing you to further reduce your auto insurance premiums.
8. Stay Loyal
Loyalty means a lot in any business, and the car insurance business is no different. In fact, many auto insurance companies are now offering reduced premiums as a way of rewarding some of their most loyal customers.
When looking for cheap car insurance, agent loyalty can be your best friend. Once you find an insurance company that offers the amount of coverage you need for the right price, develop a relationship with them.
Loyalty also relates to making your payments on time. Paying your premiums on or before the due date every single month will help you avoid late fees and additional fines or charges.
9. Get Liability Only if Your Car is Older
Most drivers automatically opt for full coverage on their vehicles when in reality, not every one of us needs full coverage. If you’re looking for cheap car insurance, try to find a policy that covers only the areas you need and nothing more.
If you already have full coverage insurance, it’s never too late to ask your agent for a decrease in coverage. Towing fees and rental car fees that are covered by a policy may sound good, but if you have a second car then you might not ever need to use a rental car. Furthermore, some individuals may hold memberships elsewhere that grant them access to reduced towing or automobile service charges.
10. Get Storage Insurance if Your Not Driving a Vehicle Year Round
If your vehicle is used as a seasonal vehicle or a show vehicle you may not require full insurance year round. For vehicles that are put in storage for any amount of time, storage insurance is your best option for cheap car insurance.
CHECK OUT: Are You an Aggressive Driver?
Note that this type of insurance is not legal for driving on, though it will pay out in the event your vehicle is damaged during storage. Depending on the exact make and model of the car in question, and depending on the type of damage that has been done, repairing the vehicle without insurance may end up costing you thousands of dollars in out-of-pocket expenses.
11. Improve and Fix your Credit Score
Your credit score affects many different things in your life, not the least of which is your auto insurance rates. If you’re looking for cheap car insurance, one of the best things you can do is clean up your credit score; it may be costing you thousands of dollars annually on your car insurance payments.
Keep your credit score clean by paying bills on time, paying back loans on time, and avoiding maxing out your credit cards. Bounced checks and bank overdrafts can also hurt your credit score, not to mention your pocketbook as well.
12. Clean Your Driving Record
Maintaining a clean driving record is the key to getting dirt cheap car insurance from your agent. Your first accident alone may result in as much as a 40% increase on your monthly premium, so driving carefully while on the roadways really can help keep your auto insurance as affordable as possible.
Most auto insurance companies offer a discount for safe drivers, though the exact definition and criteria of “safe” driving and a “clean” driving record will likely vary from agent to agent and company to company. Remember that agents aren’t likely to bring this discount up on their own, so don’t be afraid to ask them about it as long as you feel you have the clean driving record to back it up.
13. Vehicle Safety Issues
The safety of your vehicle will also be taken into consideration by your agent when you are trying to get cheap car insurance. The technology and features seen in newer vehicles make them far safer than older vehicles, so you can get a start on lowering your premiums either by having updated safety features professionally installed into an outdated vehicle, or simply by purchasing a more recent car.
Things to look for when taking vehicle safety into mind include automatic seatbelts, as this feature almost guarantees that both the driver and passenger will be wearing their belts at all time, and both driver-side and passenger-side airbags.
Airbags in the rear seats of the vehicle can also help to improve the safety rating of your car, thereby lowering your monthly car insurance rates in the process.
14. Get a Security Device
Exactly where you park your car at night is a big factor when calculating your auto insurance premiums, but having advanced vehicle security may also be factored in. If your vehicle is already equipped with a modern, functioning alarm system, mention it to your agent; you may be able to get a reduced premium because of it.
If your vehicle doesn’t already have an alarm and you want cheap car insurance, it may be worthwhile to pick up a brand new system and have it installed. Today’s vehicle alarm systems are not nearly as expensive as they used to be, they are quick and easy to install for anyone with common automotive knowledge, and they can save you a lot of money not only on your car insurance, but in case someone tries to break-in to your vehicle as well.
15. Park Off-Street, or Even in a Garage
While vandalism is more obvious in certain parts of the country, there is no doubt that the trend is on the rise throughout the entire country. Unfortunately, one of the top targets for today’s thieves and vandals include cars that are parked out in the open and left unlocked and unattended. They are the easiest targets to hit, and many drivers have trouble finding cheap car insurance because of it.
If your car is parked in a private garage on your property, however, you are likely to see a sharp decrease in your auto insurance coverage. This is not to say that a garage is a foolproof method of protecting your vehicle or your property, but it can help deter thieves.
Insurance agents know this, and they’re willing to charge you a little bit less if you are able to park in a garage at night. Even a simple carport may help lower your insurance rates; it never hurts to ask.
16. Verify Accuracy on Your Policy
It never hurts to browse through your insurance policy to make sure everything is correct. Make sure you are being given the right amount of coverage and paying the right price for your premiums. You’ll also want to make sure that your personal information is all accurate, as an error here could end up costing you money every month.
If you want cheap car insurance, it is crucial that you take your time and double-check all of your information. If you find any kind of errors, make sure to report these to your insurance agent as soon as possible, preferably immediately. Some of the most common errors include birth date and marital status errors, but these two mistakes are also amongst the most costly. Be certain that this information is accurate in order to receive the absolute best car insurance rates from your insurer.
17. Retirement Discounts
Depending on the exact area in which you reside, retirement typically comes at 55 or 65 years of age. Certain insurance agents offer discounts to retired drivers, and this is done for a variety of reasons.
Firstly, retired drivers usually spend less time on the road than most other drivers. Without a daily commute to and from work, retirees typically put far less mileage on their vehicles than drivers who have to drive to work and home each day.
If you want cheap car insurance and you are 55 years of age or older, don’t be afraid to tell your insurance agent. A retiree discount can make a huge impact on the amount of money you pay each month, but many don’t even realize this. Again, this is a benefit that isn’t typically offered outright by your agent, so you’ll need to ask about it in order to gain the discount.
18. Affiliate Discounts
Nearly every car insurance company offers different discounts based on your personal group affiliation. Like with most other discounts, this one is not usually advertised by your insurance agent. Never be afraid to mention the groups you are a part of and ask your agent if there any discounts available for you.
The most common group affiliations cited to receive discounts on their auto insurance include your work, college or university, military organizations, and many more. No matter how small or unknown the group or organization may seem to you, don’t hesitate to ask about a discount; it could be your ticket to cheap car insurance through the insurer that you already use.
19. Take An Advance Driving Course
Driving classes are offered by a variety of organizations, both public and private. If there are any types of driving classes available through your insurance agent, you may want to consider attending and completing them in order to find cheap car insurance through an existing insurer. If you are unaware of any classes being offered in your area ask your agent; they’ll be glad to help.
Be aware that if you take a class and fail, however, you may end up with an increased insurance rate instead.
20. Get Good Grades & Ask For Student Discounts
Getting good grades is important in school, but it can also help lower your auto insurance premium as well. In fact, if you are looking for cheap car insurance one of the best things you can do is succeed in school.
It doesn’t matter whether you are a teenage driver still in high school and driving under a parent’s policy or a student in college with your own vehicle and insurance, there are usually many discounts available to you for receiving good grades.
21. Drive Less: Walk, Bike, Carpool, Take Public Transportation
The amount of time you spend on the road, as well as the actual mileage you put on your vehicle can also be factored in when determining your cheap car insurance premium as well. If you don’t drive very often and don’t put many miles on your vehicle, then you’re likely to be eligible for a rate reduction.
Like with many of the other methods that can be used to decrease your premium, however, you’re going to have to ask for this discount specifically.
Auto insurance discounts for low mileage are more actually more common than you might think. Insurance companies realize that there’s not as much risk involved with drivers who aren’t on the roads very often, and they’re usually willing to adjust your rates accordingly.
22. Make Larger Payments on Your Premium
You have more control over the specific payment arrangements that are made with your agent than you may think. In fact, you can actually choose to pay off your entire premium, either on a 6 month or yearly basis, and save quite a bit of money in the end.
Of course paying in full isn’t always a viable option in every scenario, and some have no choice but to make monthly payments. Some even struggle to make that.
Many people don’t realize this, but if you are making monthly payments to your insurance company then you’re not getting the cheap car insurance that you should be. Don’t be afraid to ask your agent about paying in full. You’re likely to see a smile on their face as well as receive a good discount on your car insurance.
23. Verify VIN Accuracy
Many drivers don’t know this, but if the VIN (vehicle identification number) of your car is off even by one digit, then you’re probably not receiving the correct auto insurance quotes. The VIN is used to identify your vehicle, and is unique to each specific vehicle. It is also used by law enforcement to positively identify your vehicle in a wreck or if it is stolen. If your VIN is entered incorrectly you might be getting overcharged through absolutely no fault of your own and without even knowing it.
RELATED: What to Do After a Parking Lot Accident?
Being aware of your vehicle’s exact VIN and double-checking its accuracy on your specific policy is something that few drivers do, yet something simple that nearly everybody can benefit from. VINs vary greatly, though all cars manufactured after 1980 feature VIN consisting of 17 characters.
24. Review your Policy for Unnecessary Add-Ons.
Since automobile insurance companies are far more numerous than they were just 10 years ago, some companies have started offering benefits and plans that are aimed at helping the driver. However, many of these packages are added to your normal insurance policy automatically and with your knowledge, and some of them aren’t even worth the amount of extra money you’ll have to pay on your insurance premiums.
Some plans offer to replace your car with a new one of equal value if your car is wrecked in an accident, but this is actually referring to the value of your car at the time of the wreck and not at the time of the original purchase. Factor in depreciation, and you’re looking at recouping only a fraction of what you paid for your car.
25. Go Green!
With global warming and other environmental concerns more publicized than ever before, “green” vehicles are now being pushed as replacements for our modern vehicles that are already on the road. In order to add an increased incentive for purchasing one of these environmentally-friendly vehicles, many car insurance companies are offering lower auto insurance premiums to owners of “green” or environmentally-friendly vehicles.
While the cost of a new vehicle might not be worth the lower premium, if you are in the market for a new car then you may as well buy an energy efficient model. Not only will it help save the environment, but it will also help you find cheap car insurance rates that you might not have had access to otherwise.
So you’ve decided to buy yourself a new car. Congratulations. The next step for many Australians is locating a car loan that suits their needs. Fortunately, RateCity compares a variety of low interest and flexible car loans for a variety of borrowers. The next step in the journey is asking yourself the following questions.
How much do you need to borrow?
If you’ve already done your research and know what car you want, then you should only need to borrow the value of that car – easy! You could possibly add a little more to your car loan to cover extra costs such as insurance, but generally speaking the less you choose to borrow, the smaller your monthly repayments, and the more money you ultimately save in interest and fees.
The other option is to calculate the maximum car loan total you can afford to repay, then go car shopping with this budget in mind. Just take care, and resist the temptation to blow your entire preapproved budget on a super-luxury vehicle if you ultimately don’t REALLY need it. Choose your car with your head, not your heart, and you could ultimately get a more affordable deal.
How much can you afford to pay back per month?
When comparing car loans, try to get an approximate idea of how much you can afford to pay back each month, and use this figure to help you determine which car loans may be the best for you.
Remember that if you opt for a car loan with a variable interest rate, your repayments could go up or down from month to month, so if you’re planning your budget in advance, it’s worth leaving a bit of wiggle room just in case of surprise interest rate rises.
If you’d rather not risk having rate rises leave you out of pocket, you might consider a fixed rate car loan, where the interest rate is set in advance and stays the same for the lifetime of the loan. While you won’t enjoy savings from interest rate cuts, at least you’ll enjoy the confidence and security of knowing exactly how much money you’ll be paying per month, with no surprises.
If you want to keep your monthly repayments on the lower side, it’s possible to stretch out the length of your car loan, and pay back the balance in smaller instalments over a longer period of time. Just keep in mind that if you choose a longer car loan term, you’ll ultimately pay more in interest over the lifetime of the loan, likely costing you more in total than if you’d made larger monthly repayments over a shorter period.
It’s also worth remembering that for many car loans, you won’t just be paying interest, but additional fees and charges as well, such as application fees and ongoing fees. To get a better idea of which car loans are likely to cost you more in total, check out their Comparison Rates, which combine their advertised interest rates with their standard fees and charges, and express them as a percentage. Remember that a car loan’s comparison rate doesn’t include its every cost, nor does it account for its extra features, so use the comparison rate a guideline and not as a decision-maker.
Can you use the car as security?
Many car loans are Secured Loans, where if for any reason you’re unable to make your repayments, the lender will recover its losses by repossessing an asset of yours – usually the car you’re buying. These loans often have lower interest rates, as they represent less risk to the lender, though some lenders only offer secured loans for cars that fit certain criteria, such as cars under a certain age, or particular vehicle models.
If the vehicle you’re looking at isn’t eligible for a secured loan, some lenders offer Unsecured Car Loans, where your shiny new (or used) vehicle is not at risk of being repossessed, but you may have to pay a higher interest rate instead.
Are you buying a new or used car?
While you may need to pay more up front for a brand new car, lenders tend to consider new cars to be less of a financial risk than used cars (less wear and tear, plus newer technology means they’re more likely to last for longer), so you may enjoy a more competitive interest rate on a new car loan.
Because used cars are perceived as greater financial risks by lenders, you’ll likely pay more in interest for a used car loan. That said, used cars are often somewhat less expensive to buy than new cars, balancing the scales somewhat. Plus, the value of a used car tends to depreciate more slowly than a new car, so you should ultimately enjoy more value from your loan.
What counts as a “new” or “used” car for the purposes of car loans? Different lenders use different criteria – some may classify any car less than 2 years old as “new” and any older car as “used” and set their terms accordingly. Some lenders also have a maximum age for vehicles they’ll offer loans for (e.g. 5 years), as vehicles older than this are considered too high-risk.
Want to be able to pay off your car loan early?
If you find yourself with some extra money available, such as if you receive a bonus from work, a tax refund, or if an interest rate cut leaves you with a budget surplus this month, you might be able to add that extra cash onto your car loan. By making higher or additional repayments, you can get closer to exiting your car loan early, and reduce the total amount of interest you need to pay.
Just be mindful that some lenders charge fees for making additional payments and/or making an early exit from your loan, to make up for some of the lost interest. These fees and charges tend to be more common for fixed-rate car loans where your repayments are scheduled well in advance, but always check first before taking out a car loan.
A Redraw Facility is another handy feature to keep an eye out for if you’re thinking of adding extra money onto your car loan. If you find yourself in a tight financial spot, a redraw facility will allow you to put any extra money you’ve paid onto your car loan back into your pocket, freeing up your finances to cover unexpected expenses. This extra flexibility can allow you to pay extra onto your car loan with confidence, as you’ll be able to access these funds again if you really need them. Just check your lender’s terms and conditions, in case there are restrictions on how the redraw facility can be used.
Do you have a deposit ready?
If you have your eye on a particular car, but don’t have enough money saved up to make a full deposit on a car loan, it doesn’t mean that vehicle’s out of your reach. Some lenders offer car loans with a high Loan to Value Ratio (LVR), where you pay a smaller deposit and borrow a greater percentage of the car’s value. Some lenders also offer 100% car loans, where you pay no deposit and instead borrow the full value of the car. These loans typically involve higher interest rates due to the increased risk to the lender, so check whether you can afford the repayments to determine if a 100% car loan is the best choice for you.
Compare rates and find the best car loans for you
Remember, the best car loan for you is the one where you get the funds and the features you want, as well as repayments you can comfortably afford, and you get to drive away in your newly-purchased ride.
By comparing the car loan offers at RateCity, you should soon be able to narrow down your options to just the car loans offering the terms that best suit your needs.