Almost all states have a firm requirement that drivers must have auto insurance in order to drive legally, and all states require you to be financially responsible for any damage that you cause while operating your vehicle.
The reality is that the cost of an auto accident and the potential loss related to vehicle theft, weather-related car damage and more can be staggering. Car insurance is an excellent way to protect yourself against significant financial losses.
However, car insurance policies vary dramatically by coverage, cost and more. If you are preparing to start looking for a new auto insurance policy, focus your attention on these important points to ensure that you purchase an excellent policy that meets your needs.
Coverage Types and Limits
While most states have minimum insurance requirements for drivers to meet, these requirements vary substantially. In fact, in some states, the required coverage limits are half of what they are in other states.
The first step to take when reviewing auto insurance quotes is to understand your state’s requirements. Always ensure that a quote provides you with at least the minimum coverage required by your state. Then, determine if you would benefit from additional coverage.
Remember that any expenses not covered by your auto insurance policy are yours to pay out of your own funds.
Qualifications for Discounts
Most auto insurance companies today offer drivers at least a few discounts that can help you to save money. However, the types of discounts, as well as the qualifications, vary.
For example, a safe driver discount is common. Some auto insurance companies provide a safe driver discount if you take a driver’s safety course every year, and others offer it based on your safe driving history.
In addition, the value of discounts varies. Always review possible discounts available by speaking directly with a company representative when choosing the right auto insurance.
Keep in mind that there may be additional discounts available to you if you take a few steps, such as by setting up an automatic payment for your premium.
Your auto insurance deductible can be more important to you than you might initially think. A deductible is the amount of money that you pay each time that you file a claim.
A standard auto insurance deductible is $500, but you can request a higher or lower deductible. A lower deductible results in a higher premium amount and vice versa. You may be inclined to choose a higher deductible amount to save money on your premium, but this is not always advisable.
The deductible should be affordable for you to pay at any time, and you may not be able to afford a $1,000 deductible as easily as you could afford a $500 or $250 deductible. In addition, by choosing a higher deductible, you reduce the financial benefit of a claim.
For example, if damage to your vehicle is $1,000 and your deductible is $1,000, filing a claim has no financial benefit. On the other hand, if vehicle damage costs $1,000 and your deductible is $500, a claim would have a $500 financial benefit.
While all drivers should have auto insurance, keep in mind that the cost of coverage and the coverage itself can vary. These factors each play a critical role in how beneficial and cost-effective your coverage is. Spend time educating yourself about insurance terminology.
Then, take the next step to actively compare quotes for the coverage types and limits that you need. Remember to compare new quotes annually so that you can keep your coverage updated and avoid paying too much for auto insurance.
What are you doing to find better auto insurance rates? Share your thoughts and ideas below.