Understanding how auto insurance works and figuring out what is the best option for you is not always a clear picture, as auto insurance works in many different ways and has many different options. When buying auto insurance though it is important to understand the basics and follow some key tips so that you know you are making the right choice.

What is Auto Insurance Based on?

Auto insurance is based on two things: underwriting and rating.

• Underwriting is assessing you to see your risk and if they will insure you based on your risk.
• Rating is based on the underwriting and takes into account many factors, which allows them to decide how much financial responsibility they need to have for you.

Rating factors normally include your driving record, where you live, gender, age, marital status, if you have had prior auto insurance coverage, your vehicle use and condition, and the make and model of your car. It is important to understand that each factor plays into how much risk you are as a driver. Being seen as “more risky” will mean you will be paying more for your insurance as they will have to have more financial responsibility for you.

The Types of Auto Insurance

When it comes to auto insurance there are many different types and options, as well as additional coverage options to pick from. It is important to understand each one so that you can make the best choice for yourself. 

Here are the most common types:

• Liability Coverage: Covers the cost of an accident you cause, including property damage and injury
• Personal Injury Protection: Covers medical expenses if you or someone in your car is injured in an accident
• Uninsured / Underinsured Motorist Coverage: Covers the cost if someone you are in an accident with does not have insurance or will not fully cover the costs
• Collision Coverage: Covers the cost of damage to your vehicle no matter who is at fault
• Comprehensive Coverage: Covers damage to your car that is done when it is not being driven like flooding, fire, theft, and other situations

You can also add on additional coverage options, like roadside assistance or new car replacement coverage if you feel the need to. The most important thing though is making sure you have the correct amount of coverage. Take into account how often you drive your car and where to, how much your vehicle is worth, and how much you are willing to pay out of pocket for damages.

Tips to Follow

Here are some tips you may want to consider when looking to purchase auto insurance:

• If you already have homeowners or renters insurance it might make the most sense to get your auto insurance from the same company, as they can often bundle them together for a lower cost.
• Make sure you pick a deductible or premium you are comfortable with. If you are willing to pay more out of pocket after an accident, then go with a deductible for a lower premium. It all depends on if you would rather pay out of pocket now or more later.
• If you have a teen or college student who is driving, you may be eligible for a good student discount. This is because teens and college students with good grades are often seen as more responsible and therefore less risky.
• Make sure you are watching your credit score and improving it as needed, as having a good credit score can lower your insurance costs.
• Fun fact: Did you know that auto insurance is mandatory in every state but New Hampshire and Virginia?

At any time make sure you get in contact with your insurance company with any questions you may have.

At Small & Son Insurance, we help you get the coverage you need to keep moving forward — in your car and in life. After over 100 years of experience insuring vehicles, we’ve learned that auto insurance isn’t about cars and trucks – it’s about the people inside them. Give us a call today at (570) 421-0111 to contact our friendly and professional insurance agents for a personal quotation!