Car insurance is priced based on you and your driving record, your car and where you live and drive, plus on any state-specific rules that might affect insurance rates. Because insurance is regulated by individual states, rates vary sharply among states. So, if you paid $1,000 for car insurance in Iowa, for example, and then moved to Silicon Valley, paying two or three times that amount may alarm you but it shouldn't surprise you. California insurers don't necessarily take those extra premium dollars to the bank. There is a lot more traffic, accidents, auto thefts and related risks of loss in California, and these statistically known expenses help explain the higher premiums paid by California drivers.
States have different minimum insurance requirements . Please keep in mind that these are minimum requirements. Getting a policy with these levels of protection will satisfy the law in your state but probably will not provide you a whole lot of solid protection should you be in an accident. Remember what insurance is for - to protect you and your property. Property can mean everything you own besides your car, so, don't put your assets at risk by buying a policy with bare-bones liability coverage.
Because liability is so potentially large in an auto accident, determining who's at fault in an accident can mean big money. Even in what are called "choice" or "no fault" states, being found liable for an accident can be a life-changer. You may lose your coverage and your license, face much more expensive insurance costs for several years and also be on the wrong end of liability lawsuits should the accident involve any serious injuries. Twelve states and Puerto Rico have some form of no-fault car insurance. Look for details on your state's insurance web site.
One common and cost-effective way to boost your liability protection is to get what's called an "umbrella" liability policy that tacks on substantial liability protection for your vehicle(s) and your home. The catch is that you generally need to insure both your car and home with the same insurer in order to qualify for an umbrella policy from that carrier.
Finally, keep in mind that car insurance can vary by the type of car you drive. The Insurance Institute for Highway Safety conducts safety tests and provides vehicle ratings used by the insurance industry in calculating your insurance rates.
If You Have a Bad Driving Record
Drivers with accidents and traffic tickets on their records may have trouble qualifying for an auto policy. But because coverage is legally required, the insurers doing business in a state have set up what's normally called an assigned risk pool, where they agree to provide coverage to drivers with poor records.
If you're rejected for normal car insurance coverage, the insurer that rejects you is supposed to tell you about the assigned risk option. Your state insurance department web site should have this information as well. When you apply to the assigned risk pool, your coverage will be randomly assigned to one of the auto insurers in your state that participates in the pool.
So, you may not have much choice about who insures your car. And, you'll pay more for coverage - often a lot more. Assigned risk designations often last until your record has improved - that can take three years in many cases but check with your state to find out.
There also are insurers who specialize in covering what are known as "substandard" drivers. They are willing to accept riskier drivers in exchange for collecting higher premiums from these drivers. If you qualify for one of these policies, you should find out how the proposed rates compare with those charged in your state's assigned-risk program. Sometimes, not often, you can find better rates in the assigned-risk program.
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