One of the biggest expenses we all take on is owning a vehicle. Not only do we pay thousands on the vehicle, but we invest in the upkeep, maintenance, and fuel to get from here to there. And we have to pay insurance to keep our valuable assets protected, not to mention ourselves and our finances. But insurance doesn’t always come cheap. Here, examine the basics behind your insurance policy and how you can save.
Different types of coverage
Car insurance policies are basically broken into two parts: Bodily injury coverage and property damage coverage. This means your coverage needs to cover your car, another driver’s car, other property, your health, your passengers’ health, and anyone else you may injure. Lowering your coverage means if you get into an accident and/or hurt someone, you’ll have less insurance to cover the expenses.
Here’s the more accurate breakdown of coverage you should have:
· Collision. This is the coverage for any accidents. Your collision coverage is what will pay for auto damages when it’s your fault.
· Uninsured motorists. In the event someone hits you and doesn’t have insurance, or enough insurance to cover damages.
· Bodily injury liability. This insurance covers you, passengers, and others injured at your fault.
· Property damage liability. This covers damages you may have to pay if you hit a building or other structures, along with car repairs.
· Personal injury protection. Beyond traditional medical payments, this type of coverage will also cover lost wages when someone is injured in a car accident, as well as rehab, funeral expenses, and more.
· Comprehensive. This covers your car when something damages it other than another car, such as a hail storm, a tree limb, or vandalism.
Now, insurance agents will tell you to get the highest amount of coverage, “just in case.” But you can make adjustments to reach minimum coverage that will protect you and not cost you hundreds a month.
You need to meet your state’s minimum coverage requirements. New Hampshire is the only state that doesn’t have any requirements but the rest of the states will have a minimum requirement for bodily injury and property damage.
You will find additional coverage options that are not required by your state but can come in handy in saving you money. These include reimbursement for car rentals while your car is in the shop, emergency roadside assistance, broken windshield coverage, and others.
There is the price you pay for your insurance and then there is the deductible you pay when you file a claim. The lower the deductible, the higher the premium. You could pay $100 out of pocket every time you file a claim but most drivers, especially good drivers, choose a higher deductible to save money on monthly premium payments.
Ways to save money
There are several discounts and ways to chip away at premium costs. These include:
· Drive safely. You’ll pay less for your insurance if you have a clean driving record – no accidents or tickets within a certain timeframe, at least two years – with safe driver discounts.
· Paying in full or auto payments. If you pay your premium In full rather than establish monthly payments, you could save as much as 10%. You can also save if you enroll in autopay.
· Have safety features. If your car is equipped with airbags, anti-theft devices, rearview cameras, self-correcting steering, or other features, you can trim off your premium.
· Have good credit. Your credit score affects many important financial decisions and that includes your insurance. If your credit is not good, insurers may think you won’t pay your premiums and are a liability. You’ll save the higher your credit score.
Unfortunately, some things affect your premium that you cannot change, such as:
· Your age. Teenagers have a higher record of accidents, which is why you will pay higher rates until you reach the age of 25.
· Your gender. Men are also more likely to have an accident and drive slower and less likely to drive under the influence so if you are male, you’ll have higher premiums.
· Where you live. Well, you could move but some states have higher premium rates than others, especially with each state having its own regulations and minimums. Some less expensive insurance carriers may not be permitted to operate in some states too.
No two auto insurance providers are the same so it is wise to shop around. To save time, there are free online comparison sites that will give you a side-by-side look at prices based on your needs, state, and background. These sites, such as Gabi, Policygenius and CarInsurance.net, get paid by insurance companies but do provide unbiased rate charts so the cheapest insurers are the cheapest.
The bottom line
Taking the time to work out discounts will help chip away at a hefty insurance premium. There are ways to save if you are careful and seek them out.