When’s the last time you shopped for car insurance?
Surprisingly, 36% of American drivers never shop around for better insurance coverages or premiums. Why? It’s probably because insurance is something we usually don’t care about until we’re in a car accident, or experience a rate increase.
However, the truth is, savvy car owners, know that shopping around a policy is the best way to protect your finances and property. To help you have the best coverages, at a fair rate, we’ve created this guide. We’ll show you what coverages you need, while also helping you understand how insurance companies determine your premium.
Read on to get the clarity you deserve on auto insurance.
Understanding Car Insurance Coverages
Let’s start by reviewing what your car insurance coverages do for you. It’s the coverages job to protect 3 things; Your money, body, and car.
First, liability coverages protect your money by paying for any damages you’re found at fault for in a car accident. Next, bodily injury coverages protect your body by paying for any injuries you might sustain in a crash.
Third, comprehensive and collision coverages protect your car by paying for any repairs you might need an accident, or even a whole new vehicle if necessary. Comprehensive covers things like theft and storm damage. Whereas, collision covers car damages that occur from the impact of a crash.
Do you also have uninsured motorist (UM), or medical payments? What about personal injury protection (PIP)? Medical payments, UM, and PIP, are all coverages designed to protect your body by paying for injuries that happen after a crash. If the other driver doesn’t have insurance, or they have low limits, uninsured motorist can also help pay for your damages.
However, it’s still a good idea to hire a lawyer after an accident. An experienced personal injury attorney will be able to walk you through the insurance claims process, so you can maximize your payout.
What Coverage Limits Do You Need?
You’d be amazed at how inexpensive it is to raise your coverage limits. If you haven’t had an insurance agent evaluate your policy, you owe it to yourself to place a few calls. Call 3-5 insurance companies today and ask them to give you comparison quotes for the following coverages:
- 25/50 Bodily Injury
- 50/100 Bodily Injury
- 100/300 Bodily Injury
- 250/500 Bodily Injury
If you don’t already have uninsured motorist coverages, you’ll want to get a quote for them as well, using the same coverage limits we listed for bodily injury. Depending on where you live, sometimes the price difference between $50,000 worth of coverage and $100,000, is only a few dollars more!
Coverage Limit Breakdown
Let’s say you had 25/50 bodily injury coverage, and you hit a car from behind that had 2 passengers. Each of the passengers could receive $25,000 each for their injuries. However, if the injuries exceed $50,000, you’d be on the hook to cover the rest.
What’s Full Coverage?
When you hear someone say they have, “full coverage”, they usually mean they carry both comprehensive and collision. However, if you have an older vehicle, it might not be worth your time to carry comprehensive and collision. You’ll need to speak to an insurance agent in your state to find out what they’d recommend.
In some states, like Florida, it’s worth your time to carry comprehensive, even if your vehicles not worth anything. In Florida, if you crack your windshield, the comprehensive coverage kicks in, and the best part is you don’t have to pay a deductible.
How Insurance Companies Determine Your Rate
Do you feel like you’re paying a fair rate for your policy? If not, it’s time to do something about it. Several factors affect your policy premiums. For instance, your age, driving history, and claims history all play a role. However, there are also bizarre factors that affect policy rates, such as the time of year, or color of your car.
The good news is that each insurance company has its unique rating system. You should frequently shop around with your policy, to see what companies offering the best rates at different times throughout the year.
The only time you’ll want to avoid switching insurance providers is if you have a bad driving history. If your rates are reasonable at your current company, we suggest you keep your policy where it’s at.
Lower Your Premium
Call your insurance provider today and ask them to evaluate your policy for any discount opportunities. Sometimes certain life changes, such as graduating from college, owning a house, or joining certain organizations, can qualify you for discounts.
If you have a squeaky clean driving record, ask about safe driving discounts. Finally, when all else fails, you can look into raising your deductibles to lower your premium.
Dealing With Deductibles
Certain coverages, like comprehensive and collision, come with deductibles. The deductibles are the amount you’ll need to pay before your coverages can apply. Say for instance you backed up your car into a pole and needed repairs.
Before you file a claim, consider how much the cost of the repair will be. If you had a $500 deductible, you’d have to pay $500 before the coverages would pay for anything. If the damages are less than $1,000, you’d be better off paying out of pocket, rather than having a claim on your insurance history. The fewer claims you have, the easier it’ll be for you to keep your rates low.
Review Your Policy
Now that you know more about what your car insurance coverages do, it’s time for a policy checkup. If you don’t already have a hard copy of your insurance policy’s declaration page, print one out today.
You can either find the policy online or have an agent email you the policy documents. Once you have your current coverages, you can start shopping for a better rate! For more helpful car tips, check out another article from our auto section.