Auto Insurance Coverage Advice That You Need To Know

There is a lot of car insurance advice swirling around, and some people’s advice is better than others’. If you want the lowdown on the best choices for coverage, then read on.

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Auto insurance is about protecting you and your financial well-being. It is not about trying to find a rock-bottom price or the least amount of coverage. Such options really won’t pay out at claim time; the only one paying will be you! Certainly, car insurance does not have to be overly expensive, but only searching for cheap coverage won’t help you in the long run.

It is a bit like paying the lowest price possible for a fire extinguisher only to find it is so cheap that it actually won’t work to put out the blaze that is threatening to burn down your home. If you had paid a bit more upfront to buy a good extinguisher, the fire would be put out quickly and with minimal damage.

Know Your Coverage Limits before an Accident

One of the most important pieces of advice you can follow is to know how much coverage you have, as well as what it covers, before you have an accident. All of the following advice is about ensuring that you have enough coverage, so it is important to understand those coverage options completely.

If you feel clueless about car insurance, find a guide about coverage or a knowledgeable friend or family member. An insurance agent will also be able to help. Understand each portion of your coverage and know your limits for coverage, advises the industry specialists at the National Association of Insurance Commissioners.

Then, at the site of an accident, you won’t be stressed out wondering if your injuries and damages will be covered. You won’t have to fight down that panicky feeling of impending doom, wondering how your vehicle will be fixed and how your medical bills will be paid, because you will already know.

Buy More Coverage than State Minimums

The first bit of advice you need to follow is to buy more liability coverage than your state’s minimum amounts. Your state’s minimums are not recommendations; they are the lowest amount of coverage that you need to legally drive your vehicle on the roads.

Minimum levels are set to draw the line somewhere, not to be used as a guideline. Minimum levels are set to act as an incentive to those who feel that car insurance is out of their financial reach. It is a starting point, not a rule, as some insurance is better than no insurance at all.

Liability coverage pays for damages and injuries that you cause to others in an at-fault accident, and it is required in just about every state in the U.S. You will be required to choose liability limits for injuries and damages, and you should choose levels of coverage that will protect you fully.

Your insurance will pay up to the limits that you set. Any amount over the limits you set will be your responsibility to pay. You can be sued and ordered to pay restitution through liquidating assets or garnishment of your wages to cover those amounts not paid by your insurance.

Experts, such as those at the Insurance Information Institute, advise that you purchase $100,000 in bodily injury liability per individual, $300,000 for the entire accident and $50,000 to $100,000 in property damage liability coverage.

These limits will ensure that you have enough coverage for serious accidents that include many vehicles and many people.

The advice for buying more than state minimum amounts of liability coverage holds true for additional coverage such as personal injury protection and uninsured/underinsured motorist coverage. Even in states where these coverage types are options rather than mandatory, you should still purchase enough coverage to protect you from serious accidents.

Get Full Coverage

Another coverage recommendation that you should follow is ensuring that you have full coverage. There are only a very few instances when this isn’t the best advice. Full coverage includes collision and comprehensive, which pay for damages to your vehicle even if you were at fault for the accident or if there is no fault to assign at all.

Collision pays for damages from accidents, and comprehensive covers just about everything else. While you need to understand exactly what your comprehensive insurance includes, usually comprehensive coverage includes damages from fire, floods, wind, and other natural disasters. It also covers damages from vandalism or car theft.

You may hear advice about dropping full coverage once your vehicle is paid off, but this is generally a bad idea. If you drop collision and comprehensive, then the only one who will pay for your damages or loss is you, outside of an accident that was another driver’s fault.

Without collision coverage, you will have to pay for repairs or to replace a car if an accident is your fault or if you hit a stationary object. Most people don’t have thousands of dollars to repair or replace their vehicle, so they have collision coverage.

Similarly, comprehensive will pay if a tree limb falls on your vehicle, hail dents the hood and smashes the windshield, or a car thief makes off with your ride. It will also pay if you hit an animal, if your vehicle catches on fire, or if a flood floats your car out to sea. Again, most people can’t pay to fix or replace a vehicle completely out-of-pocket, so they have comprehensive coverage.

Choose a Low Deductible

With full coverage, you don’t specify a coverage limit, you set a deductible. A deductible is an amount that is your responsibility to pay. Raising your deductible can lower the costs of the coverage, because you are taking on more responsibility for paying for damages.

You decide how much responsibility you want since deductibles range from $250 to $2,000, so you have many options.

Good advice concerning a deductible is to choose a deductible amount that you are able to pay, not that amount that makes your insurance coverage the cheapest. If you choose a $2,000 deductible, then you insurance company will cover your damages, minus your deductible.

If your damages cost $5,000, then your insurer will only pay $3,000 towards repairs. Your vehicle won’t get fixed until you come up with the additional $2,000 to pay the garage.

Similarly, you can also find trouble with a deductible that is too high if your vehicle is totaled. Your insurer will deem your vehicle to be a wreck if the cost of repairs is higher than the fair market value of your vehicle.

Then they will pay you the fair market value, minus the deductible. From this payment, or settlement, you must pay off the lienholder; hopefully, you will have some money left over for a down payment on a new vehicle.

If the fair market value of your vehicle is $12,000, and you still owe $10,000 to the lender, then a $2,000 deductible will allow you to merely break even. There will nothing left over to assist you with a down payment.

Look at Options

There are many other options that are neither part of liability coverage nor part of collision and comprehensive. The advice concerning your other options is to carefully weigh whether you need them or not. For instance, if your vehicle is worth less than you owe, then it is advised that you get GAP insurance. GAP stands for general asset protection, and it pays the difference between what you owe and the fair market value of your vehicle.

Another option that you should consider is roadside assistance with towing. This coverage is invaluable after an accident where you vehicle is inoperable; it is pretty good when you lock your keys in your car, too! However, if you have a better towing package with an auto club, then you likely don’t need to buy the coverage again.

Furthermore, there is also rental car reimbursement coverage for you to consider.

The website Wiser Drivers advises that most vehicles are in the shop for two weeks getting repaired after an accident; if your rental vehicle costs $40 a day, then your rental car alone will cost you well over $500.

If you have an extra car or a spouse’s vehicle that you can use, then you can probably refuse the coverage. If not, then rental car coverage is a relatively inexpensive coverage for how much it will save you in the long run.

Compare Prices

The last bit of advice about insurance coverage will help to save you a lot of money without compromising coverage. All experts advise that you shop around and compare prices for car insurance coverage before buying. The prices for exactly the same amount of coverage can be very different.

Research into average rates by the Consumer Federation of America found that rates vary from hundreds to even thousands of dollars between companies. Each insurance company calculates its rates differently, so you really can find more savings for the exact same coverage. The only way to know how much any provider will charge you is to get a rate quote.

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