Getting the wrong coverage can be almost as bad as having no auto insurance at all. What if you were in an accident and found out that your coverage was adequate for everything except the very circumstance you found yourself embroiled in? To prevent that unhappy situation, it pays to educate yourself about the insurance coverage that some of the most important you can have to protect yourself and your finances.

How Do They Set the Rates?

To understand how much your coverage will cost, you'll first need to know what factors a company uses in order to assess your risk to their company. The lower the risk, the lower your premiums! Insurance companies assign their potential clients to groups determined by factors such as where you live, your credit score, how many miles you drive, your driving record, claims record and more. If you have had previous claims you are more of a risk than someone who has had none so far. Your credit score is an indicator of your personal responsibility and general level of caution. All these factors put you in a risk group that determines the premiums you'll pay.

Extras You Might Want

Did you know that some of the most beneficial coverage costs very little? Roadside assistance, reimbursement for rental cars in case of an accident and comprehensive insurance all cost very little but can be real lifesavers in case of a breakdown, an accident that disables your car or a broken windshield.

Choose Your Vehicle Carefully

The car you drive also factors into your premiums. A sports car with expensive replacement parts that tempts a driver to high speeds will cost much more to insure than a family sedan. A car that's not popular with thieves will also cost you less to insure. 

Auto insurance companies are by necessity very competitive. With about 200 million licensed drivers on our nation's roads and highways, they have to be! If you think that your insurance company is charging more than you can afford, you'll probably be able to find a lower price from one of their competitors. However, never let your policy lapse as that will signal that you are a high risk.

Other Ways to Save

One way to save on insurance is to choose a higher deductible. Figure out how much you could afford to pay out of pocket for damages to your car then choose as high a deductible as you can. The less your insurance company has to pay out, the less they will charge you. 

Did you know that you probably qualify for several discounts that can save you money on your insurance premiums? Most companies give discounts for good driving records, for living in low traffic areas, driving fewer miles than the average driver, owning a car with the latest safety devices, and other circumstances you may qualify for. When you get a quote, ask about discounts and take advantage of those that apply to you.

Finally, shop around by getting several quotes before deciding.  The internet is a convenient place to do this and allows you to compare rates and coverage when and where you choose. Making an informed decision in a non-pressured atmosphere is probably the most important thing you can do in choosing your auto insurance.