With all of the bills you have to pay, the last thing you want to do is spend money you don’t have to. Many people spend too much money on their car insurance premium because they don’t understand auto insurance. If you’d like cheap car insurance, you need to know what coverage you need and how much is necessary. We have a couple resources to help you find insurance, too.
Finding car insurance
Looking up free online car insurance quotes is the easiest way to shop around for car insurance. There are several websites that do the car insurance comparison for you. Consider getting quick quotes online:
Car Insurance Coverage Explained
You’ve got a car, and you’ve realized the benefits of having car insurance. It provides protection of your assets if you get sued over an accident. You will get coverage for damage to your car and other property and even medical coverage for yourself if you’re involved in an accident. But looking at your policy makes you wonder what car insurance is all about. Does it take a rocket scientist to explain car insurance coverage?
Luckily, it doesn’t. Understanding auto insurance is easy once you understand the seven parts to a full coverage car insurance policy.
1) Bodily Injury Liability. This part of the policy protects you if you injure or kill someone while driving your vehicle. It also protects your assets, such as your house, stocks, valuable possessions, etc., by providing legal defense if someone sues you because of an accident you were involved in.
The standard coverage for most policies is 10/20. This means that your insurance carrier will pay $10,000 per person, but will not pay more than $20,000 total for one accident. This is often not enough to cover the costs of medical care for serious accidents, so there is also a 100/300 coverage. Some carriers allow you to purchase combined single limit coverage which sets only a limit for how much your carrier will pay out per accident. So while a standard 100/300 will only cover up to $100,000 per person, a $300,000 combined single limit coverage plan does not limit how much one person can receive. It only limits the total amount your carrier will pay out for the accident.
2) Medical Payments, No-fault or Personal Injury Protection Coverage. Where bodily injury liability provides medical coverage for other people, personal injury protection coverage pays for medical expenses for the driver and passengers of your own vehicle. Sometimes this will also cover medical expenses if you are hit by a vehicle as a pedestrian.
Many insurance companies will attach a co-pay and premium to their personal injury protection coverage (PIP). These co-pays and premiums can often mean that after an accident, you’re stuck with a hospital bill of several thousand dollars even after your carrier has made their payments. When shopping for auto insurance, make sure to have your representative quote you a PIP with no co-pay and deductible, as well as one with a co-pay and deductible. The price difference may not be that great, and it may save you thousands in the long run.
3) Uninsured Motorist Coverage. This coverage provides protection for you should you be hit by someone without insurance. In some states it can also provide coverage should you be hit by a hit-and-run driver in an accident that was not your fault. With the large number of uninsured motorists on the road, this is becoming a necessary part of a good auto insurance policy.
Uninsured motorist coverage can also provide you and others who were injured in your vehicle with additional medical coverage should your PIP reach its limit. It can be purchased in split limit amounts of 10/20, 100/300, etc., just like bodily injury liability and PIPcoverage. When you purchase this coverage, you’re providing more protection for yourself and those traveling with you in your vehicle.
4) Comprehensive Physical Damage Coverage. This covers damage done to your vehicle by things other than car accidents and collisions. For example, it covers damage done to your car by animals, flood, fire, or in the event it is stolen or broken into.
With this type of coverage, it is often best to select as high a deductible as you can afford. The higher the deductible, the lower your overall policy premium will be. It is often a good idea to save up the deductible you have selected for this coverage and keep it in your savings account for the day when you may need it. By saving it and stocking it away, you can often afford to have a high deductible that will save you money in the long run by lowering your premium.
5) Collision Coverage. This covers the cost of repairs to your vehicle when it hits, or is hit by, another car or object. When you purchase collision coverage, you’re really insuring your car for its cash value. So if you have an older car that isn’t worth much, you can often drop thiscoverage to save money on your premium. To find out what your car is worth, check the Kelly Blue Book value.
6) Property Damage Liability. Should your car hit and damage someone else’s property, this coverage will protect you and can be used for legal defense if you are sued by the property owner.
This coverage is often included in your bodily injury liability coverage, and could be quoted to you as 100/300/50. The first two numbers represent your bodily injury liability coverage, and the last number, 50, represents the $50,000 that will cover property damage liability. Many carriers have property damage deductibles, so be sure to ask what it is and to select an amount that you can afford. And to keep your premium low, consider saving up the deductible amount so that should anything happen, you won’t stress your wallet.
7) Rental Reimbursement Coverage. If your car is damaged in an accident, this coverage will pay for a rental car while your car is in the shop. Insurance carriers put different limitations on how much they will pay per day, and for how long they will pay for the rental vehicle. Be sure to ask your carrier what their restrictions are, and consider dropping this portion of coverage if you have an alternate way of getting around should your car end up in the shop.
How much coverage do you need?
The question of coverage is dependent on two things: the cash value of your car and your available funds for deductibles and premium payments. If you drive an older vehicle that is worth a few thousand …or a few hundred … you can drop the collision coverage on your car and save yourself a lot of money over time. Kelly Blue Book offers yearly updates to the value of vehicles, and you can find out what your car’s cash value is on their site.
Bodily injury liability, PIP and uninsured motorist coverage is important, but gives you the flexibility of selecting lower coverage if you can’t afford the 100/300 coverage. However, if you can afford it, it is wise to go with 100/300 coverage for these parts of your policy simply because car accidents and the medical expenses associated with them are often higher than you think. It’s better off to pay a little more a year on your premium than to be responsible for a $6,000 hospital bill.
Most states have a car insurance minimum coverage law that requires you to carry certain amounts of coverage in order to drive legally. Your insurance carrier will make you aware of these minimums. If you are leasing a vehicle, you will also be subject to specifications of how much insurance you need to carry in order to fulfill your leasing agreement. Be sure to have those specifications handy when you speak to an insurance carrier about securing coverage.
Getting auto insurance discounts
Auto insurance companies give discounts for a variety of factors they think represent a good driver: if you’re a student who gets good grades, this can often mean a discount on your auto insurance. You can get discounts for having multiple cars on the same policy, or for using the same insurance carrier for your homeowner’s or renter’s insurance. If you have a clean driving record or have taken a defensive driving course, this can also entitle you to a discount. Ask your insurance representative about the auto insurance discounts they offer, and find out how much the discount would be. Sometimes it will be enough for you to justify signing up for a defensive driving course.
Understanding auto insurance isn’t rocket science, but knowing the ins and outs can help you get that cheap car insurance you’ve always been looking for. And you won’t have to go with a shady company to get it, either. It’s all about understanding car insurance coverage and using that knowledge to your benefit!
