When you first think about car insurance, you’re probably not that enthused. For many, it’s an inevitable part of being a responsible car owner that just seems like a drag. But it’s an important step to protect yourself financially, which is why we’ve decided to write a blog about the basic ins-and-outs of auto insurance.
How much coverage will you need?
Most states require car insurance by law, and those that don’t have other policies in place such as fees and loss of license in the event of unpaid damages during an accident. Check out this article, State-by-State Minimum Coverage Requirements, to see what’s necessary in your state. Keep in mind though, it could be in your best interest to purchase coverage above and beyond these numbers, depending on your situation.
In general, there are a few basic types of auto insurance coverage that everyone should be aware of.
1) Liability coverage: This is legally required in most states and covers the other driver in a crash where you are at fault. This includes injury and property damage. Liability coverage is typically written in a #/#/# format, where the first number is the limit for bodily injury per person (in thousands), the second is the limit for bodily injury per accident and the third is the limit for property damage.
2) Collision coverage: This covers damage to your vehicle that is specifically caused in a crash. It doesn’t matter whether the damage comes from an accident with another vehicle or a run-in with a tree, collision coverage is there to help repair/replace your car.
3) Comprehensive coverage: This covers damages that can happen from other events besides a crash, such as weather damage, vandalism and car theft.
4) Uninsured motorist coverage: This helps protect you from other drivers who might not have insurance.
5) Medical payments coverage: This could help pay for select costs when it comes to injuries you or your passengers might sustain in an accident.
So how do you decide how much coverage is right for you (beyond the state minimums, of course)? It depends on your comfort level with risk. If you have a lot of assets, you’ll obviously want more insurance. Other factors to consider are your past driving record (more fender-benders equals more coverage) and your typical commute (if you have to drive more than the average person or along dangerous routes, you probably want more coverage).
Shop around for the best rate
If you’re willing to do your homework, you’ll most likely end up with a better rate. What influences the estimated quotes you’ll receive? Some factors include:
1) Your age and sex, as well as those of the other drivers in your household.
2) The make, model and year of your vehicle.
3) The type and amount of coverage you’re looking for.
4) Where you typically park your car overnight.
Marital status, credit rating and zip code can also be potential factors.
Not sure where to start? At Central National an insurance agent will help get you information and quotes from a variety of providers, such as Allstate, Progressive and others, so you can shop around all while dealing with the same person. To learn more, visit our insurance page on our website, or request a quote online at https://centralnational.com/apply/insurance-quote-request.asp.
Look for Discounts
You can also ask any potential insurers about what discounts they offer and whether or not you qualify. Examples of some common discounts include:
1) Good driving record: If you haven’t been in an accident, received a traffic ticket or made a claim in recent years, you could qualify for this discount.
2) Good grades: Many insurers have a discount available for student drivers who maintain a specific determined average GPA.
3) Driver’s ed: It could pay to take and complete a driver’s ed or driver’s safety course as many companies will see you as less of a risk.
4) Multiple policies: Sometimes if you have more than one insurance policy with the same company, they’ll give you a discount on the bundle.
5) Safety equipment: If your car has antilock brakes, antitheft devices or other equipment, you could qualify for this discount
6) Longtime policy holder: If you’ve held a policy with the same insurer for several years, ask them if they have this discount.
Consider the Deductible
The deductible is the amount you pay out-of-pocket in the event of damages. If you’re willing to pay a higher deductible if something happens, you’ll most likely receive lower monthly premiums as a result. While it may seem tempting to take a really high deductible (no one thinks they’re going to have an accident) in favor of lower premiums, make sure you choose a deductible that you can afford. If you do have some type of accident, you’ll be glad that you can actually afford to cover your portion of the payments.
Shopping around for auto insurance isn’t a one-and-done process. It’s something that you should be reviewing each year, or on a semi-regular basis. Take into account how much coverage you need, if your financial situation has changed and which insurers can give you the best rates with the best discounts.
If you’d like to take a more in-depth look at auto insurance, the National Association of Insurance Commissioners’ booklet, A Consumer’s Guide to Auto Insurance, is a good place to start.