When buying car insurance, you have the opportunity to get better protected against accidents, unfortunate occurrences, unexpected losses and claims against you. It is legally required virtually everywhere anyway that you may as well check all your coverage options and prices when you are shopping for a policy. Spare a little time to determine what is enough for your circumstances and budget and what you can leave out to save money.
There are certain issues stopping people from arranging good auto insurance. Misconceptions, lack of knowledge and money are some of the concerns. Unfortunately, insufficient cover is only one part of the problem because there are 28 million (12.6%) uninsured drivers in the US, according to the Insurance Information Institute. While some people want to buy every available coverage, many vehicle owners haven’t got money to waste and just want to buy enough car insurance coverage within their budget.
Here are some of the circumstances, protections offered and premium costs to help motorists choose the right coverages and policy limits;
Liability
Virtually every automobile owner is required to buy liability and other state required covers to be able to drive legally. If you have been driving without insurance because you cannot afford it, this would be the level to start as it would be the cheapest auto insurance you can buy. The best advice to such drivers would be not to give up after the first or second quote and try to find the lowest price by getting as many quotes as it takes.
As a reference point, the average state required minimum car insurance in the US is $622 but it can change substantially from one state to another. The average premium can go as low as $223 in Iowa and as high as $1,371 in New York. Your rates will depend on your zip code, age, gender, driving history, credit score, details of your automobile and many other factors.
Liability vehicle insurance covers possible damages you may cause to other motorists and road users in an accident you are at fault. It is usually shown as $25,000/$50,000/$20,000 in which $25,000 is the maximum Bodily Injury coverage per person, $50,000 the upper limit for all injured persons and $20,000 is the maximum amount payable for property damages. These figures are actually generous because they are much lower in many states.
No-fault states also require Personal Injury Protection, which pays for your and your passengers’ medical expenses and lost wages if you are injured in an accident regardless of fault.
Around 22 states require Uninsured/Underinsured Motorists Bodily Injury coverage, which pays for your and your passengers’ medical expenses if the accident is caused by an insured driver. Uninsured Motorist Property Damage may not be required by your state but you can include and it pays for your property damages. The maximum Uninsured drivers coverage limits must match your Liability limits. In other words, you cannot buy more for yourself than what you provide for others.
General consensus in the industry is that these limits aren’t enough to cover possible damages you may cause to others and should be increased. A good liability car insurance policy might be structured as $50,000/$100,000/$50,000 and $100,000/$300,000/$100,000 is more comfortable. About 60% of motorists buy more liability coverage than what is required by their state, according to Progressive.
If you have insufficient liability coverage you would have to pay the rest of damages and injuries you caused out of pocket. Knowing how expensive it can get, it is best to arrange a more comfortable level of liability coverage, even though you will obviously have to pay a little bit more.
Physical Damages
The next step is to consider if you want to insure your own vehicle for possible damages it may sustain. Anything you add on top of liability coverage is optional if you own your automobile outright. If you have an expensive automobile you would want to insure it properly to protect your investment. And your lender or leasing company would contractually require you to buy;
Collision coverage, which protects your own car against accident related damages.
Comprehensive coverage pays for other damages like fire, theft, vandalism and acts of nature, except for collisions.
GAP insurance is required if you have a loan on the vehicle and pays the difference between what your insurer would pay if your auto is totaled and how much you still owe to your lender.
So, full coverage auto insurance that comes with Liability, Collision and Comprehensive is very popular in the US as about 72% of motorists go for it.
If you own an older automobile, have very high rates in your region or due to your age and driving records and have some savings to pay for another automobile if you have to, you may decide to have liability only vehicle insurance and save some money.
Full coverage policies on average cost $2,014 in the US and it is 3.2 times higher than the average for liability only policies.
Again, full coverage premiums substantially differ depending on your and your vehicle’s details and your zip code. For example, they can go as cheap as $941 on average in Maine and as high as $3,183 on average in Florida. Your circumstances will affect significantly as well. For example, if you have a teenage driver on your policy, you may have to pay twice higher than the average.
Other Add-ons
There are a few more additional coverage, even though they may not be as significant or costly as Collision and Comprehensive coverage. Here are some of them;
Roadside assistance is actually a very handy solution offered by automobile insurance companies at a fraction of cost to independent Recovery services. They usually cost about $10 – $15 to add to your policy that gives you the chance to call your insurer’s roadside assistance if you run out of gas, lock yourself out, have a flat battery or need towing.
Rental Car Reimbursement pays for rental cars you have to hire because your vehicle is being repaired by insurance after a damage. You need to consider if you can or cannot do without a car for a while in such cases and costs.
As you can see, you can have good auto insurance protection if the money isn’t an issue. Still, you need to consider if you need anything more than a liability only coverage depending on your financial position and value of your automobile. If you feel you don’t need the extra coverage, you might as well save your money.
Tips to Reduce Costs
There are a few things you can do to make sure you get absolute best rates so that you can buy enough vehicle insurance coverage or save more money. Here are some of the most effective solutions to reduce premiums;
- Shopping around is the easiest way of making sure you find the cheapest companies for the coverage you need. It doesn’t take long to check and compare prices online. If you don’t have the time, you can ask your agent to look for the best prices for you if it is an independent agent or broker.
- Increasing deductibles may help you reduce the cost of Collision and Comprehensive coverage and still give you the opportunity to make claims if you ever need. Increasing car insurance deductibles is a way of accepting more risk yourself so that your premiums can go down. Deductible is the amount you need to pay out of pocket for each and every claim.
- Look for saving opportunities and discounts to reduce costs. If you are a good driver, married, own your home and have good credit score, insurers you applied to would include all the discounts you qualify for and offer you very cheap rates. Even if you don’t qualify for any of them, you can still save money by paying your premium in full or paying the installments automatically out of your account.
Often lack of money is a serious barrier to choosing the best coverage for yourself. In such cases, you can try your best to find the lowest priced auto insurance and see if you can afford the coverage you need. Lack of knowledge can be another barrier so you should try to find out as much as possible about the possible protections you can get and costs.
Misconceptions can be an issue as well since many people still think that Liability coverage will pay for their cars and full coverage means everything is covered. Learn about coverages, try your best to get the most affordable rates and arrange the most comfortable policy for your circumstances. In the end, there are so many variables to consider that only you know how much car insurance is enough for your circumstances and budget.