Understanding Auto Insurance Coverage

 

Types of Auto Insurance Coverage

The type of auto insurance coverage you choose depends on what level of protection you want and can afford. The major options are:

1. Liability coverage

This covers injuries and damages to other people and their vehicles. It's required in most states to legally drive, but the minimum may not cover all your costs in an accident. Consider getting more than the minimum.

2. Collision coverage

This covers damages to your own vehicle after an accident. It's a good idea if your car is newer or you still owe money on it. The more coverage you have, the less you'll pay out of pocket for repairs or if your car is totaled.

3. Comprehensive coverage

This covers damages to your vehicle that aren't from a collision, like theft, vandalism, or natural disasters. If you live in an area with high crime or severe weather events, comprehensive coverage is probably worth the cost for the peace of mind.

4. Medical coverage

This covers medical bills for you and your passengers after an accident. Health insurance may not cover all auto-related medical costs, so medical coverage can help avoid large out-of-pocket expenses.

5. Uninsured/underinsured motorist coverage

This covers your costs if an uninsured or underinsured driver hits you. Sadly, many drivers are on the road with no or little insurance, so this additional coverage is a good safeguard for you and your loved ones.

The key is to balance how much coverage you need with what fits your budget. Talk to your insurance agent to determine the right level of protection so you can drive with confidence.

READ ALSO: Top 10 Comprehensive Auto Insurance

Top 10 Ways to Save on Auto Insurance Premiums

To lower your auto insurance bill, here are some of the top ways to cut costs:

1. Bundle your policies

If you have multiple policies with the same insurer like home, life or renters insurance, bundling them together can qualify you for a discount. Bundling allows the company to reduce their risk across policies, so they pass on the savings to you.

2. Raise your deductibles

The higher your deductibles, the lower your premiums will be. If you can afford to pay more out of pocket for claims, increasing your deductibles on comprehensive and collision coverage can make a big difference.

3. Drop unnecessary coverage

Do you need rental car or roadside assistance coverage? Dropping extra coverage you don't need can reduce your bill.

However, make sure you still have adequate liability, collision and comprehensive coverage to protect yourself financially.

4. Improve your credit score

In many states, your credit score affects your auto premiums. Improving your score over time may qualify you for better rates with many companies.

Check your credit report for any errors and pay bills on time to boost your score.

5. Drive safely

Your driving record impacts your premiums significantly. Obey traffic laws, avoid accidents and don't get tickets. Many insurers offer safe driver discounts for those with a clean record.

6. Compare quotes frequently

Shop around at different companies to find the best deal. Compare quotes from at least three insurers once a year to make sure you have the most affordable coverage. You may be able to save hundreds by switching.

7. Consider usage-based insurance

If you drive fewer miles, usage-based or pay-per-mile insurance may charge you less. These types of policies use telematics devices to track your mileage and charge you based on how much you drive. Low mileage drivers can really benefit.

8. Ask about discounts

Don't leave money on the table. Ask your insurance agent about all possible discounts you may qualify for, such as good student, anti-theft device, military, etc. Even small discounts can add up to big savings.

9. Drop collision coverage on older cars

Once your vehicle gets older, the cost of collision coverage may outweigh the value of the vehicle. Consider dropping collision when the annual cost exceeds 10% of your car's worth.

10. Raise your liability limits

Increasing your liability limits can sometimes lower your premiums slightly. The higher limits mean the insurer is less at risk if you cause an accident, so they may pass on small savings to you.

READ ALSO: Top 10 Auto Insurance Providers in the USA for 2024

How to Shop for the Cheapest Auto Insurance Rates

Here are some tips to help you find the cheapest auto insurance:

1. Compare quotes from multiple companies

Don't just go with the company you've always used or the one your parents use. Get quotes from at least 3-5 companies to compare rates. Some of the major ones to check include Geico, State Farm, Progressive and Allstate.

2. Check independent agent sites

Sites like NerdWallet, The Zebra and CarInsurance.com allow you to enter your information once and then compare rates from many companies at once. This can save you a lot of time.

3. Raise your deductibles

The higher your deductibles, the lower your premiums will be. Raise your collision and comprehensive coverage deductibles to at least $500 or $1,000 to significantly lower your rates. Just make sure you can afford the deductibles in case of a claim.

4. Drop unnecessary coverage

Drop things like roadside assistance, rental car coverage or accident forgiveness if you don't need them. Only pay for the coverage you truly need.

5. Ask about discounts

Inquire about common discounts like bundling with home insurance, safe driver, student, anti-theft device or multi-car. These can lower your premium by 10-30% or more.

6. Consider usage-based insurance

If you don't drive much, look at plans like Metromile that charge based on your actual mileage. You could save up to 50% compared to traditional plans.

7. Compare rates often

Auto insurance rates change over time, so you'll want to recheck other companies' rates at least once a year to make sure you still have a competitive price. You could potentially save hundreds per year by switching.

Conclusion

Following these auto insurance shopping tips and putting in the time to compare multiple quotes will help ensure you find the cheapest rates for the coverage you need. Be patient and persistent, and the savings will be well worth the effort.