Written by An insurance agent will tell you that you should get as much car insurance as you can comfortably afford and to keep your deductibles low and your limits high. But is that really necessary and can you afford that? If not, then let’s see what could be a good medium giving you the coverage you need at a price you can afford.
Looking Inside A Basic Car Insurance Policy
There’s no easy way to find the best car insurance, and rarely is it good to always go with the cheapest, so being informed will give you the advantage on both coverage and price and will help in lowering your average car insurance bill.
Car Insurance Coverage Types:
- Bodily Injury Liability
Beyond state minimum requirements this is entirely up to you and how much protection you can afford and feel comfortable with. If you make a decent wage and own an expensive house, you may want to raise your bodily injury liability limits up to $100,000/$300,000. Why? Let’s look at what the 100/300 numbers mean. $100,000 is the maximum amount the insurance company will pay each person, but, the $300,000 is the total amount the company will pay out. Essentially this covers personal injury for up to 3 people at a limit of $300,000 for all involved.Why does it matter what you make or own? At fault or not you can be sued by the other party and your liability coverage will help offset those costs. Not having enough bodily injury coverage could mean you lose your home or other valuable property to pay damages. If you have a lot of valuable assets you may want to look into additional liability in the form of an Umbrella Insurance Policy
- Property Damage Liability
State minimums are often low for this coverage, but just like the above scenario should your coverage also be at the minimum? Most likely not.Property damage liability is the coverage that protects you from paying for damage to property which includes vehicles, light poles, building, fences…you get it. $10,000 won’t repair the majority of vehicles out there if totaled and if you’ve never seen the cost of a light pole ($25,000+) you don’t want to get the bill. If you can afford to pay the extra premium for $50,000 that should give you a good amount of protection, $100,000 liability coverage even more so.
- Uninsured and Underinsured Motorist Protection
For a small premium increase you can have this coverage that protects you against a variety of accidents, most importantly the scenario that involves a driver without car insurance or not enough coverage. While you may carry your own health insurance, this is just added protection for bills that aren’t covered up to $100,000 if you opt for the $100,000 maximum coverage.
- Personal Injury Protection
Personal injury protection is required in a few states see:http://autoinsurancestories.com/no-fault-auto-insurance-states-pip-insurance/ and the amount of coverage (around $5,000) isn’t going to make your car insurance premium rise much.
- Comprehensive and Collision (comp & collision)
When you see an itemized cost of your car insurance plan and realize that a very large percentage of the premium is allocated to Comp and Collision you’re likely wondering why it costs so much and how you can lower that portion of the bill. Comp & Collision costs so much because it’s covering the cost of repairs and replacement of your vehicle parts including vandalism and theft. The make/model/year and your personal driving record have a lot to do with your comprehensive and collision.Even though it’s not recommended that you skip this coverage (your vehicle will not be covered in a accident without it) you can always raise your deductible to $1,000 to help lower your rates a little bit. One important note is that comp and collision coverage uses ACV or actual cash value of your car, more specifically – Kelley Blue Book value. Often if your car is not worth more than a few thousand dollars you’ll end up paying more out in a year or two for the coverage than your car would be worth to replace so in that instance talk to a licensed insurance agent about the option that works best for you.
- Add-ons
This is where insurance companies try to make some low risk money. You may want to skip the rental car reimbursement, and roadside assistance (especially if you already have AAA) but be on the lookout for add-ons that may be worthwhile like full glass replacement coverage.
