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— Physical Damage Coverage
In addition to basic liability coverage, the most commonly recognized coverages are collision and comprehensive. Collision coverage pays for physical damage to your car as the result of your car colliding with an object, such as a tree or another car. This coverage is relatively expensive and is optional and not required by law. However, if your vehicle is financed or leased, your lending institution or lessor may require you to have collision insurance.

If you have an older vehicle worth less than $2,000, there is little reason for you to purchase collision coverage because you are likely to pay more money in premium than you would ever receive as a result of a claim. The loss-settlement agreement for collision coverage gives the insurance company the option to pay for the repair or replacement of your vehicle with like kind or quality.

Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. Comprehensive coverage also covers broken glass, such as windshield damage. Comprehensive coverage is less expensive than collision coverage, and many consumers choose to carry it. However, remember it is your choice; you are not required by law to carry comprehensive coverage.

Deductibles reduce your premiums because you agree to deduct an amount from the claim your insurer otherwise would have to pay. Insurers offer deductibles because they reduce the number of small claims that are costly for them to handle.

If you purchase a new car with a loan, the financial institution that lent you the money may require you to purchase collision and comprehensive coverage. This is because the lender considers your car as collateral for the loan, and they want to make certain it is worth something if they need to repossess the vehicle.

If you have to buy or decide to buy collision or comprehensive coverage, you can save money by agreeing to the highest deductible you can afford to pay. Since comprehensive coverage is usually cheaper than collision coverage, many people save money by dropping the collision coverage and keeping the comprehensive coverage to protect against natural perils, theft and glass breakage.

QUESTIONS COMMONLY ASKED BY INSURERS FOR RATING
When shopping for coverage, you should be prepared to answer the following questions from insurance companies to receive a rate quote.

Driving Record: On the insurance application, you will be asked about your previous driving record. Insurers will ask about accidents and traffic violations for any driver covered by the policy for the preceding three to five years. Drivers with previous violations or “at fault” accidents are considered to be a higher risk and are charged a higher rate. The insurer also will request a motor vehicle report from the DMV to compare against the application.
Territory: The claims experience in your geographical area also will affect your rates. Applications include a question that asks for the address where the vehicle will be garaged. From this information, insurers assign you to a territory, the rate of which is based on historical experience for that territory. Generally, more claims are made from urban areas with tendencies of busy traffic, thefts and vandalism than from rural areas.
Gender and Age: Statistically, males have more accidents than females. For this reason, men may tend to pay more for insurance than women. A small number of states have prohibited insurers from using gender as a factor in underwriting. Nevada, however, allows this type of rating. Insurers also have statistics that show a higher number of claims for some age groups than for others. For these reasons, young men tend to pay more for insurance than young women, and a person under 25 will pay more for insurance than a person over age 35.
Marital Status: Statistics show fewer auto insurance claims among married policyholders than unmarried policyholders. Rates will be lower for married couples.
Prior Insurance Coverage: Insurers may ask if you have previously had insurance coverage because they want to know if you have ever been canceled for nonpayment of premiums or other reasons or if you have ever had any lapse in coverage.
Vehicle Use: You will be asked on the application how often and how far you drive the vehicle that you want to insure. The fewer miles you drive, the less chance you have of getting into an accident. Greater use generally will result in higher premiums because of the increased exposure to risk. Some insurers also offer discounts for drivers who participate in car pools.
Make and Model of Vehicle: The type of car you drive directly affects the cost of comprehensive and collision coverage. A make or model of car that has a high number of claims or higher claim costs will be charged a higher premium. High claims costs are generally attributable to two type of vehicles—higher-valued vehicles, which are more expensive to repair, and vehicles that have a performance history resulting in a higher severity of bodily injury losses in an accident.
Claim Frequency: The single greatest influence on the rating process is claim frequency. Claim frequency measures how often an insured event occurs within a group relative to the number of policies contained in that group. It does not mean how many times you specifically have made an insurance claim, although that will have an additional effect.

Persons sharing characteristics with a high-claims group will be charged more for insurance coverage. At the same time, persons who share characteristics with low claims classes will be charged lower rates. Insurance companies offer discounts to individuals who exhibit certain characteristics; however, the greatest controllable factor is your driving record. A person with a clean driving record will pay less than a driver with similar characteristics but with traffic violations.