With more states requiring all drivers to be insured, people are spending more time deciding what kind of auto insurance fits their driving needs. People who are unsure of the purchasing process for coverage may make better choices if they understand how their driving record, credit history, and other personal information serves to structure their individual policies.

As they consider what kind of coverage works best for them, they might consider whether their car is a primary vehicle used for work or school, or whether it is one that is driven sporadically or for recreation purposes. Identifying the car’s main function helps a driver decide whether they should buy full coverage or liability policies.

People who drive their vehicles to work or school everyday might decide to buy a full coverage policy. In the event of an accident, the policy owner will be assured that he or she, as well as the other driver if the circumstances deem it necessary, will be covered in expenses related to towing, car repair, and even car rental.

If the individual only rarely drives a car, the auto is of an older model, or that vehicle is used for recreation purposes, he or she might consider only buying a liability policy. Liability coverage generally has a lower monthly premium rate than that of a full coverage policy.

A driver with a liability policy will not be covered for his or her repair, towing, or car rental expenses. However, if the driver is at fault in the accident, the policy will pay the expenses of the other party involved in the accident. As such, it relieves the policy owner of personal responsibility for paying the other person’s expenses.

Insurers use a person’s credit rating to establish a monthly rate of premium. Someone who has a tarnished credit record and a low credit score will likely face paying a higher amount than someone whose credit record possesses few blemishes. The person with a low credit score is judged to be a risk and perhaps someone whom will not pay his or her bill on time each month, nor renew the policy when it expires. As such, the company will seek to gain as much revenue as possible from this person. Someone with a good credit score is viewed more favorably and may pay less each month.

A person’s motor vehicle record will also typically be scrutinized for how much a premium will be charged. A driver with numerous accidents and speeding infractions will most likely have to pay a higher monthly amount than someone with a clean driving record. The person with multiple tickets and wrecks may be judged to possibly cost the insurer more money; as such, the company will seek to recoup as much of these possible expenses through a higher monthly premium. Additionally, a teenager will also be deemed a risk and parents who include their teens, as is required in many states, on their policies might expect their own rates to increase each month as long as their teen is on their policy.

People who seek to purchase auto insurance may benefit from understanding how their personal information influences their car’s coverage. They might also play a role in what kind of policies they purchase when they evaluate for what purpose their car serves and how much insurance they would like to be extended for their autos.

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