We understand that car insurance coverage options can be extremely confusing and all states have varying minimum mandatory coverage requirements for auto insurance. As well there are many different optional coverage’s available to you as part of your insurance policy.
Understanding You Coverage
Your auto insurance is really a package of seven primary coverages, which make up a standard auto policy. Each of these primary coverage’s has its own separate premium and your total premium payment is the total of these separate premiums.
Once you understand the different types of coverage’s that make up your policy, it’s not hard at all understand the make-up of your policy and how each protects you
- Bodily Injury Liability: provides protection if you injure or kill someone while operating your car, as well as a legal defence if another party in the accident files a lawsuit. You’ll want enough insurance to cover a judgment against you in a lawsuit, without jeopardizing your personal assets. Bodily injury liability covers injury to people, not your vehicle.
- Medical Payments, no-fault or Personal Injury Coverage: usually pays for the medical expenses of the injured driver and passengers in your car. Some policies may also cover you while walking as a pedestrian, if a vehicle injures you.
- Uninsured Motorists coverage: pays for your injuries caused by an uninsured driver or, in some states, a hit-and-run driver, in a crash that is not your fault. In some states there is also uninsured motorist coverage for damage to your vehicle. Given the large number of uninsured motorists, this is very important coverage to have, even in states with no-fault insurance.
- Comprehensive Physical Damage coverage: pays for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen; or damaged by flood, fire or animals. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket.
- Collision coverage: pays for damage to your car when your car hits, or is hit by, another vehicle or other object. To keep premiums low, select as large a deductible as you feel comfortable paying out of pocket. For older cars, consider dropping this coverage, since coverage is normally limited to the cash value of your car.
- Property damage liability: protects you if your car damages someone else’s property. It also provides you with legal defense if another party files a lawsuit against you. It is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object.
- Rental reimbursement: coverage pays for a rental vehicle (usually up to $100. a day) when the insured's vehicle is out of commission as a result of a loss covered under comprehensive or collision coverages.
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When shopping around for car insurance, ask for quotes on all the coverage options, and adjustments made to coverage limits and deductible amounts. If raising your deductible from $500. to $1,000 is only going to save you $50 to $90 per year, you might be better off with the lower deductible. However, if the same change in deductible saves you more than $200 per year, and you are a low-risk driver, than opt for the higher deductible. (This is based on statistic that the average driver has an accident once every 5 years.)
Base your decision also on the age of the car, and how long you intend to keep it, as well as the traffic levels where you live. (i.e.: I live in an area which is mostly seniors, and in one year I was rear-end three times –while sitting in my parked car at a parking meter!)
Ask For Discounts and Special Programs
Most Car
Insurance companies offer a wide
range of discounts to reward good drivers,
safe drivers, mature drivers, Military,
and multi-car families, among others. |
You may even qualify for a discount just by belonging to a business or professional organization If you use an Insurance broker, they will be able to find the most discounts that you can qualify for and save you money on your insurance. While not all of these discounts may be available in your area, you probably qualify for one or more of these discounts:
- Air Bag: up to 25% driver-side or 40% for full-front seat air bags, applied to the medical payments orpersonal injury portion of your premium-less likely now that Airbags are standard
- Anti-lock Brake System: 5% on the collision portion of your premium
- Anti-theft System: 25% on comprehensive portion of your premium
- College Graduate: 15% discount on certain coverages (Arkansas only)
- Daytime Running Lights: 3% discount on certain coverages
- Defensive Driving Discounts: Most companies offer discount for completing a Defensive Driving course.
- Driver’s Education: Young drivers who have completed a driver’s education course earn a discount on most coverages
- Emergency Deployment: US military policyholders could be eligible for a discount of up to 25% when deployed.
- Five-year Accident-free Good Driver: may qualify for discounts up to 26% on most coverages
- Good Student: full time students between the ages of 16 and 25 with a "B" average or better could be eligible for up to a 15% discount.
- Hybrid Discount: Hybrid vehicles are now eligible to receive a 5% discount on certain coverages
- Military: Active duty, Retired, National Guard or Reserves; may be eligible for 15% discount on total insurance premium
- Associate: some Alumni associations, Partnering Organization and companies offer discounts to Graduates, and retired employs
- Multi-car: Insure more than one car with same company and you could get a 25% discount; also get a discount for insuring your home with the same company
- Professional Group: Members of professional groups, federal employee, may receive discounts
- Seat Belt Use: always wear seat belts? You may receive a discount of 15% on the medical or personal injury premium
- Renewal Discount: Most companies will offer renewal discounts of up to 30%
- Non-Smokers: don’t smoke: ask for a 5-10% overall discount
- Non-Drinker: Some companies offer 5-10% overall discount if you NEVER drink alcoholic beverages.
As you can see, there are several ways you can save money on your car insurance premiums. Don’t just accept the first rate offered you, shop around, ask questions, request special discounts. In most countries and states it’s the law: you have to have car insurance. In some places, like Ontario, Canada, you can’t buy a car unless you arrange for insurance FIRST. The fine for driving without insurance is $5,000.00 or higher.
By the way: if you leave your car UNLOCKED and it gets stolen, the insurance becomes VOID, so lock your car door! You’d be amazed at the number of people who forget to lock their cars! I live in a small town and a recent police survey found 600 out of 1,000 cars were unlocked in a public parking lot and shopping mall. |
How to Shop for Car Insurance
