Auto insurance covers damages done to you, your car, other people, and
other's property as a result of your car. The amount of insurance you need is
dependent on the other insurance coverage you have, the value of your car,
the amount of other assets you need to protect and the rules in your state.
Auto insurance can be expensive if you have a poor driving record, cover
young drivers, drive extensively in crowded areas and choose low
deductibles.
Basic Auto Insurance Coverage
Collision coverage. This portion of your policy covers
repairs to your car after an accident, no matter who caused it. If the car is
completely destroyed, this insurance will pay off. If the car was financed,
you will need the proceeds to pay off the loan. Both collusion and
comprehensive insurance is generally written to cover the car's fair market
value. If your car has much value, you should have this type of coverage. If
your car is old and has very little value, you may want to drop this portion
of the coverage.
Comprehensive coverage. This portion of your insurance
covers damage to your car as a result of random acts like fire, theft,
floods, hail damage, vandalism and even damages caused by a stone flying up
on the road and denting a fender. The amount of comprehensive coverage you
need is determined by the value of your car. Many drivers choose to keep
comprehensive coverage on less valuable cars even if they drop their
collision coverage because it tends to be cheaper. But, the insurer will not
pay more than the car is worth.
Auto liability coverage. This type of coverage is
absolutely essential. If you cause an accident with your car and injure
someone or damage their property, auto liability insurance will the pay the
injured person's medical and repair expenses. This portion of your policy's
cost is usually the greatest.
Most states require some level of auto liability coverage. You will
probably want more. If there is an accident and you are responsible for
damages, you want to make sure your assets are protected. If you have other
assets, such as a home or investments, you want to make sure you do not lose
them in a lawsuit over an auto accident. The more assets you have, the
greater the coverage you need. Discuss the coverage and costs with an
insurance agent. Also, if a driver that is un-insured or under-insured hurts
you, your policy will pay for your expenses.
Reducing your auto insurance costs
Your premiums are based on factors such as your age, where you live, type
of car, gender, driving record and how much driving you do. Costs for auto
insurance vary greatly from area to area and company to company. It makes
sense to check out several companies when choosing. Consider the premium
levels and also the service level you can expect from the company. There are
few things worse than not being able to get in touch with the insurance
company after an accident or have to drive 50 miles to get your damaged car
inspected or repaired.
You can also reduce your premiums by considering the following ideas.
- Drive safely. Many insurance companies give discounts to drivers with
no accidents or driving tickets. If you have a clean record, make sure the
insurance company knows about it.
- Raise your deductibles. Low deductibles increase premiums. Making
claims for small damages is also a hassle.
- Do not drive too much. If you have a short commute to work or take
public transportation, your rates may be less.
- Buy a car that is cheap to repair. There are probably resources at your
public library or on the Internet that will identify the makes of cars that
are expensive and inexpensive to repair.
- Use the same insurance company. There may be an overall discount if you
have auto and homeowners insurance from the same company.
- If there is a student driver, get good grades. Many insurance companies
offer discounts if a student driver gets B's or better in their studies.
- Pay the premium all at once. Most companies allow policyholders to pay
their premiums annually, semi-annually, quarterly or in some cases monthly.
Do the math and you will find that paying annually will save you money.
