There's something strangely empowering about knowing
your car is well-covered.
I am notoriously cheap. But when I was in graduate
school, my husband took on a paper route to cover
expenses. The newspaper required that we have lots of
expensive auto insurance.
Having that much auto insurance had a strange effect
on me. When I got behind the wheel of the car, I felt .
. . invincible. I started speeding just so I could get
my money's worth. Then, of course, I finished school, my
husband dropped the route, and we lowered our coverage
back to the minimum rates. Cutting back on expenses was
good, but I did miss that feeling of invincibility.
Finding the right balance between affordability and
adequate coverage doesn't have to be difficult when it
comes to car insurance. First, understand the different
types of coverage and think about which ones you need.
Next, be aware of all of the ways that you can pare down
your premium. Finally, get ready to shop around for the
Types of Coverage
There are about six basic types of car insurance
coverage. There are good reasons for having all of them,
but you may find that one or more of them don't fit your
Liability coverage protects you in the event that you
injure someone or damage property in the course of an
accident, even if the accident is not your fault. For
example, my little sister was once broad sided by a
drunk driver who ran a red light. Sis was OK, but the
other driver died. His family sued her for wrongful
death. She had the right kind of coverage, so the
insurance company was able to settle with the family;
she stayed out of court and protected her assets.
Besides protecting you from lawsuits, liability
coverage will also pay for damage to other cars and
property caused by your car. Most states require that
you have minimum levels of bodily injury and property
damage coverage, so check with your state insurance
office to find out what those minimums are.
This one is simple. It pays for repairs if your car
is damaged in an accident, and you'll definitely need it
if you have a loan out on your car. Collision comes with
a deductible - meaning that, in addition to premiums,
you will be responsible for paying for your repairs up
to a certain amount before the insurance agency starts
kicking in. The most common method of lowering your
premium is by raising your deductible. You can just
about cut your collision premium in half if you raise
your deductible from $100 to $500. The advantage of a
higher deductible is that if you get in a minor scrape,
you can pay the bill directly and avoid raising your
rates by filing a claim. This might not be a wise route
for everyone, however. If you can't afford to pay $500
out of your pocket, consider a lower deductible and a
Comprehensive covers the theft of your car and random
damage caused by, say, a collision with an animal,
vandalism, riots, and lots of other stuff. Again, this
is a must if you have a loan on your car.
If you drive an old junker, you may want to drop the
collision and comprehensive coverage altogether, as
neither is considered mandatory by your state. Insurance
policies will only cover damages up to the dollar value
of car. If your car isn't worth much, the amount of the
claim probably won't cover the cost of repairs.
Also called no-fault or personal injury insurance,
medical pays the medical expenses of the driver and
passengers in the car. You can forego this one if you
already have a regular health insurance plan.
Uninsured Motorists Protection
This will pay for any damages or injuries caused by
an uninsured motorist. There are a lot of them out
there, so this is a good one to have on your policy.
Can I get a discount on any of those?
When you first ask an agent for a quote, they will
quiz you on your car, neighborhood, etc., in order to
place you in an appropriate "risk" category. The
following criteria are taken into consideration: age,
gender, the kind of car you drive (its age and safety
rating), your neighborhood, your driving record and the
length of your commute.
Changing any one of those things can lower your
premium. Drive more safely. Wear your seatbelt. Get a
safer car. Move out of the city. Hurry up and turn 25!
Unfortunately, men are considered to be a higher risk
than women, and so pay more in insurance. But, you can
get married, which moves you into the more "stable"
categories. And, you can usually get a discounted rate
if you and your spouse insure your cars on the same
Having safety features in your car go a long way to
reducing your insurance premium, in addition to saving
your life. So make sure your car has amenities like
driver and passenger side air bags, automatic safety
belts, daytime running lights and anti-lock brakes.
As with many things in life, the amount of auto
insurance that you pay for should not be based on cost
alone. Take into consideration the impact too little
coverage might have - you might wind up without a car
because you couldn't come up with the deductible for
repairs, or you could go bankrupt paying a lawsuit
judgment. Insurance isn't just about what you can afford
now. It's also about what you may have to protect in the
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