Buying Car Insurance

The cost of automobile insurance coverage can vary from company to company by hundreds of dollars a year, so it´s worth comparing costs. How much is car insurance is enough? And just as important, when is it too much? The answer to those questions is as unique as you are. The following topics provide an introduction to things you´ll want to consider.

How much coverage MUST you have?

First, understand your legal requirements. You should know how much liability insurance is required by state law. In almost all states, liability insurance is the minimum required of all vehicle owners. It covers you if you are responsible for an accident. Liability minimums per accident include coverage for bodily injury to a single person, bodily injury for all people involved, and property damage. Some states require coverage for uninsured and underinsured motorists, or Personal Injury Protection or Medical Payments, (which covers medical and other expenses from an accident).

How much do you really need?

The minimum requirements are set by state law, but depending on your circumstances you may want to maintain higher limits. If you drive a beater, rent an apartment, and have no savings, then additional liability isn´t necessary. As you already know, no one can get money from a rock and you have no assets to attach. Even if you are at fault in an accident, there is no advantage to spending additional money for insurance and you probably need the cash.

On the other hand, if you have substantial assets, you stand to lose big time if an accident is your fault and you´re underinsured. The extent of your assets and responsibilities should drive the cost of liability. The standard recommendation is to raise bodily liability to at least 100/300. The more you have, the more you stand to lose.

Comprehensive and Collision

Lease contracts and finance companies usually require both comprehensive and collision coverage. If your car is expensive, then it´s even more important. On the other hand, if your car is old and the premium and deductible together will cost you more than the car is worth, then it´s probably not worth it.

Ways to trim your insurance premiums

You may be able to reduce your insurance payments by purchasing minimums if you have other types of overlapping insurance. For example, if you have good long-term disability insurance and a good medical plan, then paying for more than the state required minimum for Personal Injury Protection isn´t necessary. If your car is under warranty, you probably don´t need coverage for a mechanical breakdown. If you carry some kind of roadside assistance, then you may not need towing insurance.

If you are thinking about changing insurers and have tickets that will drop off your record soon, wait before soliciting new quotes. If you have questions about your driving record or the length of time tickets will show on your record, contact the motor vehicle department. The single largest obstacle to good rates is a poor driving record, but you can save substantially by taking advantage of the timing.

Get competitive quotes from each company you´re considering. Make sure that you make your comparisons based on a baseline so you are comparing apples with apples. Ask about discounts that apply to you and factor those in.  Discounts are often given for a range of reasons including a good driving record and credit rating, safety equipment on your vehicle, professional affiliations, and so on.

If it´s appropriate, opt for a higher deductible. Your out-of-pocket expense may be higher, but this could translate into a significant cost savings.

Also, if you´re in the market for a new car, consider buying a car that thieves don´t love. High profile and expensive cars cost more to insure not only because they are more expensive to repair, but because of a higher incidence of theft.

Value for your dollar

The cheapest quote may not be the best deal for you. The lowest priced insurer may cost less in the short run, but what happens when you submit a claim? Check your state´s department of insurance to see if there are complaints.  Find out if they pay out quickly by contacting body shops. If an insurer is slow to pay, it could cause you headaches trying to get reimbursed and could even cause problems with your credit rating.

Get a clear idea of the financial health of your prospective carrier. Various rating organizations like A.M. Best and Standard & Poor´s can shed light on whether your insurer can honor their commitments.