How Car Insurance Works in Casa Grande, Arizona

“How do I make my car insurance affordable?” is one of the most frequently asked questions about auto insurance.  The key to understanding how to make insurance affordable is understanding how car insurance works.

Car insurance is not optional.

If you are thinking about skipping insurance in the name of pinching pennies, think again.  If you are leasing your vehicle or have a loan your finance company will require you to have insurance.  The lending company needs to ensure that if the vehicle is damaged, your insurance will cover the cost of repairs or replacement.   Many lenders and finance companies require insurance in the amounts of 100/300/100.  This means you have $100,000 bodily injury liability insurance per person, $300,000 total bodily injury liability insurance per accident, and $100,000 property damage liability per accident.  You will usually have to have proof of the minimum required insurance before a lender will finance your vehicle.

Finance companies aren’t the only ones that require car insurance.  The government also legally requires you to insure your vehicle.  This is determined at the state level.  Each state has its own minimum requirements so if you move make sure that your insurance meets your new home’s insurance minimums.  For Casa Grande residents, the state of Arizona requires a minimum coverage of $15,000 bodily injury liability per person and $30,000 per accident.  There is also a property damage minimum coverage of $10,000.  When it comes to car insurance the bare minimum can be dangerous.  If you carry only the required state level amounts, an accident can cost you much more in bills and expenses than your insurance will cover.  Work with a skilled agent to make sure you have enough coverage at a price you can afford.  There are many ways to bring down car insurance premiums without sacrificing coverage you need.

Know your policy – i.e. Read the fine print.

It is important for you to read your policy.  If you purchase a policy without understanding it you may not realize your coverage gaps until it is too late.  Liability, personal injury and property damage insurance are all important faucets of your policy.  What you don’t know can hurt you and your wallet.  For instance, if you are in a car accident, your insurance policy may only cover the value of your vehicle.  If your car is fairly new and the rate of depreciation is high, the estimated value of the car may be much lower than what you owe.  This means that the reimbursement from your insurance company might not be enough to pay off your damaged vehicle, much less help you get a new one.  Gap insurance is designed specifically to help bridge the “gap” in circumstances like this and can help you payoff the remainder of your vehicle so that you can start fresh.  This is just one example of possible policy gaps and why you need to know what is and isn’t covered.

Understand the money mechanics of insurance.

Understanding how car insurance works helps you make informed, affordable choices.  Insurance companies make their money by collecting more in premiums than they pay out in claims.  There are many factors that go into your insurance rates.

Statistics:  All insurance companies will compare your basic information to current statistics.  If you are a male, 18 year old driving a sports car your insurance rates will most likely be much more expensive than a female in her 30’s driving a minivan.  This is primarily because of statistics.  The numbers show that women and more experienced drivers are less likely to be in an accident.  Similarly, a minivan driver is much less likely to be in an accident than a person behind the wheel of a Ferrari.  While you may be a very responsible law abiding teenager with a new sports car, your insurance rates will initially reflect statistical averages and not your specific situation.

Driving record:  Generally, the better your driving record the better rate you can get.  Additionally, as you become more experienced behind the wheel you will be eligible for the best possible rates.   Insurance companies prefer responsible drivers with few or no claims.  If you have an accident or traffic violation such as a speeding ticket, your insurance company may automatically increase your rates.  The best way to keep your rates down is to keep your record clean.

Affordable premiums:  There are ways to make your premiums affordable.  A good agent will not only review your policy with you but will also help you stay within your budget.  For instance, you can usually decrease your premium by increasing your deductible.  This should be done strategically.  While a lower monthly premium is tempting, you need to sure you have a deductible you can afford.  You can also save money by bundling in one company.  By using one company for multiple policies you will usually be able to take advantage of deep discounts, giving you lower overall premiums.  Also, don’t be shy about shopping around.  There is lots of competition in the insurance industry which is good for the consumer.

Knowing how car insurance works helps you get the coverage you need for a price you can afford.  Work with your Casa Grande agent to address any coverage concerns and leverage your experience, driving record and policy bundling for the best price possible.

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Steve Gebhardt

Gebhardt Insurance Group was honored by AAA Insurance for being the top New Policy Agency in Arizona for 2013 and achieving the "Emerald Achievement Award."

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