When it comes to car insurance, nobody wants to pay too much. However, cheap auto insurance might invite an unwanted risk as well. How can you decide what level of coverage is right for you? Find out and also learn about guaranteed ways to cut costs.
Types Of Insurance
First it pays to understand the types of auto insurance. The most common types are:
- Liability – This covers accidental bodily injury and damage to property. It can also include legal fees. Most states require this type of coverage and the minimal requirements vary.
- Collision – This insurance covers damage to your vehicle if you crash into other cars, people, or non-moving objects. Even if the accident was your fault, collision covers the costs.
- Comprehensive – This covers your vehicle from theft, fire, vandalism, and natural disasters or severe weather.
Many insurance companies won’t sell only comprehensive insurance. Also, cars that are financed often are required to carry full insurance, that is, liability, collision, and comprehensive. Finally, most plans include a deductible which is your out-of-pocket expense before the insurance begins to pay.
If you want the cheapest auto insurance, then go with liability coverage only as mandated by most states’ laws. If you opt for collision as well, choosing a high deductible can drive your monthly payments lower. But here we start to bump into some risk.
High Deductible Risk
A normal deductible can range from $100 to $1000. As you can see, if you go much higher, you have to get into a pretty costly accident for the insurance to kick in. A lot of the decision depends on how much risk you are willing to assume over time. If you can handle the risk, then a higher deductible might make sense.
Now if you are involved in an accident where there is personal injury, the costs can go into the tens of thousands of dollars. State minimum liability coverage might only be $50,000 per accident. Medical bills can sometime reach $100,000 even in moderate crashes when you include rehabilitation costs. Are you willing to cover the other $50,000? Again, your risk comfort level has to help you decide. If you are risk averse, then getting more coverage might be a good idea. And think about this: doubling your coverage might only cost you another $15-20 a month.
Guaranteed Ways To Cut Costs
There are ways to guarantee lower auto insurance costs, such as:
- Keeping a good driving record
- Choose car types that are cheap to insure such as crossovers, SUVS, and minivans
- Ask about discounts such as good grade insurance discounts for teen drivers
- Shop around before you buy (Get a fast, free online insurance quote now from CARCHEX. Compare plans and save.)
Choosing car insurance can be tricky, but the more you educate yourself the more comfortable you will be in making a decision. Browse around other articles in this information center or call us with your questions at 1-877-CARCHEX (1-877-227-2439).
Published in CARCHEX Auto Insurance Resources by CARCHEX on November 11, 2014