Most people can’t afford to make one huge lump sum payment towards their auto insurance premium and find it really difficult to save up and even take small loans from friends and colleagues to make payments in one go. Auto insurance companies saw this as an opportunity to provide their customers with a monthly payment plan, at a price needless to say. The customer doesn’t make a one time payment and instead makes one down payment and either, 3, 6 or 12 monthly payments as the case may be. The insurance company charges the customers a rate of interest as the case may be, not all companies charge an interest. 

How it works 

The customer can either opt for a yearly cover wherein he or she would need to make payments for the next twelve months, or else a customer can also take it on a “pay as you go” system and pay the premium monthly till they need the cover. When the customer no longer needs the cover they need to call and inform the insurance company that they will not be making that months payment as they do not wish to be insured anymore. Failure to inform the insurance company will lead to them billing you. It is always better to have a written communication as evidence; a fax or an email is preferred to a telephone call and you should always ask them to confirm receipt of your communication.

Coverage 

Cover and extent of cover work on the same principles as standard auto insurance works. 

You can pick between liability, collision, and comprehensive insurance to ensure protection from untoward incidents.

Types of cover 

Liability cover will insure you against any damage you cause to a persons health or vehicle in the event of an accident; their medical bills and vehicular repairs are covered by your insurance provider provided you have adequate cover. Collision cover will insure you against any damage to yourself and your own car in the event of an accident; your medical bills and vehicular repairs are covered depending on your cover and your deductible amount. Non collision cover will insure you against any damage to your car caused by backing up into a stationary object, acts of nature and vandalism. Comprehensive cover will insure you from almost anything that can happen to your car or your person while using it. Uninsured cover will insure you from damages that occur when you are involved in an accident with an uninsured or underinsured driver. 

Extent of cover 

Every state has a pre defined limit of cover that the DMV (Department of Motor Vehicles) considers the bare minimum extent of cover necessary. This is by no means a yardstick and will have you spending huge sums of money in the event of a car crash. Always buy more than the state minimum, up to what you can afford, and under the current value of your car. Being over insured makes as little financial sense as being underinsured. 

Since you will be paying monthly installments you can always get adequate insurance without burning a hole in your pocket since the added expense is spread over the course of a year. 

No down payment 

No down payment auto insurance is quickly gaining popularity; the customer needs to make no initial payment except for the first monthly installment. Upon payment of your first monthly installment your policy comes into effect.

Requesting quotes:

The first step to getting your teen insurance is to involve them in the procedure and teach them how to start from scratch. Let them understand that their insurance is expensive regardless of a new policy or you clubbing it onto your auto insurance policy; this will help them get a sense of responsibility and driver safer. Get your teen to help you to find a comparison site online and get multiple quotes. 

Calculation of the premium: 

Insurance companies use information you provide to them to analyze the risk involved in insuring the teen and calculate the premium based on that risk. You will need information like the teen’s name, age, gender, license details (learners or permanent), and the driving record. If your teen drives a minimum amount you can expect a reduction in your premium since the less time your teen spends on the road, the less the chances of an accident. If your teen has any negative remarks on their record prepare for a hefty increase in the premium amount. 

Discounts: 

Students qualify for various discounts like, good student discount where students with good grades receive a discount; a student living far off from home also receives a discount. A student who drives very little can apply for a low mileage discount. 

Choosing an insurance company: 

You can either club your teen’s insurance onto your own insurance and pay a higher premium or get the teen an individual insurance policy. Get quotes for both options and then decide which one you prefer; its general practice to buy a separate policy only if the teen has his or her own car; although it can be a smart option if you own a luxury or an expensive car. 

Purchasing the policy: 

You can choose to purchase the policy online as most people do, depending on where you live you can print out your policy immediately. 

Before your teen starts driving: 

Teens are considered high risk by all insurance companies and they couldn’t disagree more, however the sad truth for them to stomach is that the insurance company bases their assumption on statistics. Statistics show that teens and young adults in the age group of 16-25 are far more likely to be involved in an accident.

Here are a few tips to ensure your teen is on their best behavior: 

Ensure your teen takes Driver’s Ed courses, the more the better; they are available online and the results are shipped to your doorstep absolutely free.

Explain to them the importance of always being attentive and driving defensively. Statistics show that most teen accidents happen because of distractions (mostly passengers) and aggressive driving. 

A talk about drinking and driving and the effect a DUI can have on their permanent record is a good way to remind them to not drink and drive. 

Tips to keep costs as low as possible: 

• Do not give your teen a high powered car, a high risk automobile will attract a higher premium. A hatchback is best suited to a teen, while sports cars and trucks are definitely not recommended.
• Ensure they keep their driving record clean.
• Install safety features in the car to avail of discounts.
• Completed Driver’s Ed courses can get you discounts.
• Your teen should only drive when absolutely necessary; a low mileage discount is available at almost any insurance company.

There are various reasons to purchase insurance apart from the obvious reason to keep your vehicle road legal. A good insurance policy can protect you from massive losses in the event of an accident and also protect you from the trials and tribulations of legal hassles; insurance companies also assist you in lawsuits that arise from a car crash. 

Custom made insurance policies 

The trust is no two individuals are alike, and no two individuals have the same needs as another person. Everyone needs basic insurance, but what about the cover, the extent of cover, deductibles and discounts?  Insurance companies serve you bulk plans based on your rough usage pattern and your vehicle type; however this is rarely enough.  Most people realize that they don’t have the right insurance plan when it’s too late, after an accident. No professional can custom build the right plan for you, you either need to do it yourself or get a family member or friend who knows and understands your needs completely to do it for you. 

Pick what you need 

Pick out cover you may need, and then decide on the extent of cover you would need. The extent of cover is directly proportional to the current value of your vehicle, as well as your usage. Deductibles again vary depending upon the current value of your car and your driving record. The trick to getting a good insurance plan is to understand your needs, don’t go by what the insurance salesman says since he or she is working for a commission and will suggest whatever gets them a higher commission. Alternatively going with the state minimum isn’t advisable either, the state minimum is the bare minimum cover you can buy and is never enough to recover your losses after a crash. 

Types of cover 

Liability: Liability insurance covers accidental collision damage caused to the third parties self or vehicle in the form of medical bills, remuneration for lost wages and repair bills for their vehicle. Liability cover is mostly the minimum requirement for your vehicle to be legal on the road. Decide upon the extent of cover; don’t settle for the state minimum unless you are prepared to shell out wads of cash if you ever meet with an accident. If you have a big vehicle like a truck, you’re better off with a higher extent of cover.

Collision: Collision insurance covers accidental collision damage caused to your self or vehicle in the form of repair bills. The payout is based on the extent of your cover minus the deductible amount. The deductible amount can be set by you when your take a policy, the higher the deductible amount the lower your premium will be and vice versa.

Comprehensive: Comprehensive insurance covers against accidental non collision damage such as backing up into a garage door or damage due to vandalism or natural disasters. The extent of collision insurance need not be too high since such damage doesn’t tend to be too costly to repair, except for theft of the vehicle.

Underinsured or uninsured: Underinsured or uninsured insurance protects you in the event of the third party not having insurance or having inadequate insurance to cover your medical bills and workshop repair bills

Extent of cover

The extent of cover should be decided upon using the above mentioned guidelines while keeping in mind the current value of your car in the market. Don’t get too much or too little cover.