What You Need To Know When Comparing Auto Insurance Rates


To get the best insurance policy, you need to know a couple of things that most people get confused with. For instance, you should be able to answer the question as to how much coverage you are willing to buy or if the coverage is enough to protect you if you had an accident. In this article, we are going to discuss similar questions that might be bogging you down in your auto insurance selection process.

What are the different types of insurance coverage?

Several types of policies are available in the market today for you to choose from. If you want the cheapest ones, pick the minimum coverage policy. This will keep you away from troubles as far as your state is concerned. In any case, you should contact your insurance agent and ask for the state’s minimum liability amount. If you are moving to another state, do the same. Do keep in mind that this policy only protects the other party’s expenses excluding yours.

Going a step higher is the liability coverage, which will take care of the medical and property expenses in the event of a collision accident. Again, you have to take care of your own expenses because this policy only pays off the other party’s expenses.

If you need a full protection, a full coverage policy is needed. This will take care of the needs for both parties. However, there are still limitations with the full coverage policy in terms of medical and legal expenses. You may have to contact your insurer to discuss the said limits.

Bodily injury protection and liability coverage

These are probably the most important areas that you need to look into, and to adjust their amounts accordingly. For those who are not using the full coverage policy, I would encourage them to increase the coverage amount of these two components. To visualize their importance, allow me to cite an example.

What you have is just the minimum liability coverage required by your state, which is $40,000. This amount will take care of the hospitalization expenses. Now, you had an accident and the police reports indicate that you are the at-fault driver, and the bad news is that the other party has to be hospitalized for a few days. To make it worse, the $40,000 was not actually enough to cover the whole hospitalization expenses. And in a matter of few days, the amount quickly vanished. This means that any excess would have to come from your own pocket. If you are unable to cover the excess amount, you could very well face legal suits. 

Now you know how important it is to make some modifications to increase the coverage amount. Increasing that amount up to $100,000 will not cost you a fortune, and the peace of mind you get in return is priceless.

This brings up to the next question, and that is how much coverage do you really need? It is a good question, and to answer that, we need to ask the following questions ourselves:

Is it a loaned vehicle or you purchase it outright? If it is the former, you will need to keep the full coverage insurance.

How much is the vehicle’s current worth? Is it more than $1000 or less? Ideally, if it were less than $1000, a minimum coverage would be enough.

In case of an accident, can you afford to replace the vehicle with a new one? If you have no savings or do not want to spend a dime, a full coverage policy is your best bet.

Lastly, do you need additional policies for your other needs? If your answer is no, all you need is a liability-only policy.