You never know when an accident occurs. That is the reason why most people want to keep their life insured. An auto insurance is more of a safety net. It is not surprising that even the best drivers face accidents. Today, streets are filled with careless drivers. They just love speed and reckless driving. In the process, their lack of responsibility often hurts those on the roads who rather prefer to stay protected by adhering to the traffic rules.

But before opting for a suitable insurance plan, most of the people get confused regarding the actual benefits of an insurance plan. Well, an insurance plan not only covers your medical costs in case of an accident, but often it does pay for your car repairs as well. In simple terms, an insurance is your firewall against any economic disaster in case an accident causes any property damage or injuries to people.

It is a given that medical costs have gotten much higher than it used to be even a decade earlier. In addition to that, car repair expenses are also on the higher side. High litigation expenses also add anxiety to your pockets. In this scenario, even a minor accident might lead to a major financial trouble for you, which might even lead to bankruptcy. Insurance, hence, is not just an option any more. It has become a mandatory choice and utmost necessary for those who wish to avoid financial hardship.

How does an insurance work?

Most people don’t have a clear idea of how actually an insurance plan works. Generally, an insurance is an agreement between your insurance company and you, in which you agree to pay a certain amount of money to the insurance company. In return, the insurance company vows to secure you from any major financial losses caused because of an accident during a specific period.

In this regard, it is important to understand that the amount you pay over a set period of time or in an one-time deal, is called a premium. This amount is generally broken into smaller pieces that you are bound to pay on a monthly, bi-annually, or annually basis. Now, in case you need to make a claim, you must pay a deductible; another payment, for the initial portion of the repair costs of your vehicle. For instance, suppose your car met an accident and you require $2,000 to repair it. In that case, you may have to submit a deductible worth $200. After paying the deductible, the insurance company will now pay you the rest of the amount upto the coverage limit.

But here’s one question that people ask a lot, and that is how do insurance companies don’t run on loss after settling so many claims? Well, when an insurance company chooses whom to secure, they take various factors under consideration. It’s just their hopes that they never have to pay everyone. The companies use a pool of premiums that they collect from their clients.

Here are the different types of auto nsurance coverage that you may opt for. They are divided based on the type of expnses they cover:

(ii) Property damage liability: Pays for other people’s property damaged in an accident that you caused. (iii) Medical payments – This particular plan pays for the medical costs in case you and your passengers have been injured in an accident. (iv) Uninsured/Underinsured motorists – In case you have faced an accident because of someone else who didn;t have an insurance, this particular plan pays your medical bills and other expenses. In several states, this particular plan might also cover any damages caused to your property. (v) Collision – This plan pays for any damage caused to an insured vehicle. (vi) Comprehensive – In case you car has been damaged because of vandalism or theft, this particular plan pays for that damage.

• Body injury liability: Pays the following:

• medical costs

• lost wages

• pain and suffering of people injured

• cost of litigation if you are sued

(ii) Property damage liability: Pays for other people’s property damaged in an accident that you caused

• (iii) Medical payments – This particular plan pays for the medical costs in case you and your passengers have been injured in an accident.

• (iv) Uninsured/Underinsured motorists – In case you have faced an accident because of someone else who didn;t have an insurance, this particular plan pays your medical bills and other expenses. In several states, this particular plan might also cover any damages caused to your property.

• (v) Collision – This plan pays for any damage caused to an insured vehicle.

• (vi) Comprehensive – In case you car has been damaged because of vandalism or theft, this particular plan pays for that damage.

In most states, it is illegal to drive a car without an insurance. Now that it is mandatory to have a car insurance in your arenal, you must apy attention to the measures that you may adopt for reducing your expenses on auto insurance. Here we have mentioned some of the practices that will allow you to avail discounts on your auto insurance plans.

• Drive an old car: Driving an older vehicle can significantly lower your auto insurance expenses.

• Try to be a good driver: Violations would automatically hurt your wallet. Amd guess what, a record of violations will continue to hurt your wallet as you will require paying an increased monthly insurance premium. Therefore, try to become a better and safer driver.

• Be a member of any organization: Inform your insurance company about your memberships in clubs or organizations, if any.

• Opt for higher deductibles to pay lower premiums: By raising your deductible, you can literally save hundreds of dollars in the form of insurance premiums.

• Lower Coverage Limits: If you want to save money on premiums, make sure that you opt for lower coverage limits.

• Drive less than you normally do: Living near your office will ensure that you drive less every day. Driving less can significantly lower your premiums.

• Good grades leads to better premium rates: Students with better grades often end up landing some amazing auto insurance discounts.

• Avoid Coverage Lapse: If you don’t allow your auto insurance coverage period to lapse, you can avoid any significant shifting of the premium rates.

• Mature-Driver gets amazing discounts: For drivers aging over 55 years, some amazing discounts are available.

We believe that you can draw some important points from this write-up and implement those for availing better auto insurance premium discounts. Stay safe and drive with responsibility