The basics of buying auto insurance
What to know when shopping for auto insurance
Auto insurance is one of the most frequently purchased types
of personal insurance. In fact, Ohio requires that you
comply with the state’s Financial Responsibility
(or FR) Law. The FR law requires each Ohio driver to demonstrate
an ability to pay for injuries to other people or damages
to other people’s property if the driver causes an
accident. Buying insurance is one way to show financial
responsibility. The easiest way to comply with the FR law
is to buy auto liability insurance. The two basic components
to auto insurance coverage are liability and property damage
coverage.
Liability coverage
Most auto insurance policies cover your liability for bodily
injury and property damage. The policy may offer coverage
for uninsured/under-insured motorists coverage. Bodily
injury liability insurance protects you against the claims
of other people who are injured in an accident for which
you were at fault. Their claims for bodily injury may include
medical expenses, lost wages plus pain and suffering. Your
liability coverage would pay these costs and the cost of
defending you against their claims. Property damage liability
insurance pays for any damage you cause to the property
of others. This includes not only damages to other vehicles
but also other property, such as walls, fences and equipment.
Uninsured motorists coverage protects you, the policyholder,
in the event that you are injured by a hit-and-run driver
or a driver who does not have auto insurance.
Property Damage coverage
Property damage coverage may include both collision coverage
and comprehensive coverage. Collision coverage pays for
physical damage to your car as the result of your auto
colliding with an object, such as a tree or another car.
This coverage is optional and not required by law. However,
collision insurance may be required by your lending institution
or lessor. In the case of an accident involving an older
car, the cost of repairing the car can quickly exceed the
worth of the car. In this case, insurers will “total” the
car and pay you what the car was worth based on its current
book value rather than fix it. Comprehensive coverage pays
for damage to your auto from almost all other causes, including
fire, severe weather, vandalism, floods and theft. You
are not required by law to carry comprehensive coverage.
Other factors that impact your auto insurance premiums
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For starters, auto insurance premiums
are linked to the type of vehicle driven. If you’re
buying or leasing a new car, check the insurance rates
before you make your final choice. For example, SUVs, convertibles
and performance vehicles typically cost more to insure.
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Safety devices on your car can help reduce
your premiums. If you’re buying or leasing a new
car, consider getting one with anti-lock brakes, side air
bags, automatic seat belts and daytime running lights.
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Anti-theft devices on your car, such as
an alarm system and global positioning system – so
that your car can be located if stolen – can help
reduce your premiums.
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Where you park your car can also impact
premiums. If you have access to an indoor garage or locked
parking lot – places that decrease the likelihood
that your car will be stolen – you may qualify for
lower premiums.
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The geographic region in which you live
may impact your premiums. For example, areas prone to extreme
weather – hail, wind storms, hurricanes, etc. – higher
traffic patterns or higher risk of theft may have higher
insurance rates. If you live in an area prone to extreme
weather, check whether your policy includes comprehensive
coverage on your car to cover potential damage from storms.
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Your driving record – tickets, accidents,
DWIs/DUIs (driving while intoxicated/ driving under the
influence citations) – directly affects your premium.
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The number of claims you have previously
filed impacts your insurance costs. Consider not filing
claims for smaller events to avoid premium increases.
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Finally, the cost of your insurance is
linked to your policy’s deductible. The deductible
is the amount of money that you agree to pay as part of
a claim before your insurer pays the remaining amount toward
that claim. For example, if your vehicle incurred $1,000
of damage in an accident and your deductible was $250,
you would pay the first $250 and your insurer would pay
the remaining $750. The higher the deductible, the lower
the premium.
Questions or concerns?
The Ohio Department of Insurance regulates agents and companies
that are licensed to sell insurance in our state. The Department’s
Consumer Services representatives can answer your insurance
questions and investigate your complaints about an insurance
company or agent. Call 1-800-686-1526.
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