Your auto insurance premium is calculated on the basis of a few facts about you, and a few facts about your car, your usage pattern, and the neighborhood you live in, and of course, the ever so popular credit rating. This is all secondary of course, to the coverage provided by your policy. First things first, understanding your insurance cover.
Liability insurance covers property damage and medical care in the event of a crash, if it was your fault. The state minimum requirements are exactly what they claim to be, the minimum acceptable cover, and this is by no means close to being adequate. Whatever your liability cover doesn’t protect you against, you are liable to pay for. A safe figure to go by is $100,000 per person in the car, $300,000 per road accident (this way you’re still protected in the event of multiple accidents) and $50,000 for property damaged during the accident. Many policies just have a single limit per accident, in such a case, $2,50,000 to 300,000 is recommended, at the minimum.
Uninsured and underinsured
Uninsured and underinsured covers medical bills for injuries to all the occupants in the car. In select states it also covers property damage id the other driver has no, or insufficient insurance.
Collision insurance covers damage to your car in the event of an accident. If to your dismay, your vehicle is totaled; you will only be compensated for the value what your insurance company considers the market value of your vehicle before the accident (taking into consideration depreciation). The total compensation you will receive will be this estimate minus the Deductibles.
Comprehensive insurance protects you against theft and non-collision related damage to your vehicle (including animal collisions). If you have a safety anti-theft mechanism and/or tracking devices installed, this could fetch you a healthy discount on your premium.
Medical insurance covers medical bills due to any injury to your person, or any of your passengers. Medical expenses are compensated regardless of whose fault the accident was. Most people don’t need medical insurance since they already tend to have adequate health insurance, and taking it will just mean a duplicate cover, which is in effect futile.
No Fault insurance
No fault insurance covers the insured person’s medical bills, and property damage, regardless of fault. No fault insurance is available in only some states.
Some points to remember
- Always check the rates at least five insurance companies, and then settle for the lowest one, however be sure to not compromise on cover to save money, that’s just being penny wise pound foolish. Also it’s not advisable to go for insurance through a new entity in the market, if that particular insurance company goes belly up, you’re left with no cover!
- Increase deductibles on your comprehensive and/or collision coverage, to an amount you can pay for. This means that you pay more to repair your car, but your premiums are also considerably lower. This method is very highly recommended by most experts, if you are a safe driver.
- Don’t shy away from asking your insurance company for discounts; don’t expect them to ask you if you qualify, they won’t.
- Ask your insurer about all available special discounts.
- Always drive safe, drive defensively, avoid text messaging, or even a very engaging conversation with a passenger when driving. Abstain from speeding or driving under the influence. One ticket could mean higher insurance premiums for over 5 years!