Your auto policy may include six coverages. Each coverage is priced separately.
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
3. Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
4. Collision
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
Before you buy a new or used car, check into insurance costs. Your premium is based in part on the car’s sticker price, the cost to repair it, its overall safety record and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. These include air bags, anti-lock brakes, daytime running lights and anti-theft devices. Some states require insurers to give discounts for cars equipped with air bags or anti-lock brakes.
Cars that are favorite targets for thieves often cost more to insure. To find out which makes and models are stolen most often, visit the National Insurance Crime Bureau.
You can get information about insurance losses experienced by vehicle make and model at the Insurance Institute for Highway Safety. Vehicles with high insurance losses will generally cost more to insure.
Ask for a higher deductible
Deductibles represent the amount of money you pay out-of-pocket before your insurance policy kicks in. By requesting a higher deductible, you can lower your costs substantially. For example, increasing your deductible from $250 to $1000 could reduce your collision and comprehensive coverage cost by 15 percent to 30 percent, depending on the car you drive. Keep in mind that claims occur on average only once every 11 or 12 years.
Reduce coverage on older cars
Consider dropping collision and/or comprehensive coverage on older cars. It may not be cost-effective to continue insuring cars with less than 10 times the amount you would pay for coverage. Any claim payment you receive would not substantially exceed your premiums minus the deductible. Auto dealers and banks can tell you the worth of a car, or you can look it up online at Kelley Blue Book.
Buy your homeowners and auto coverage from the same insurer
Many insurers will give you a discount if you buy two or more types of insurance from them. Also you may get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce premiums for long-time customers. But shop around; you may still save money by buying coverage from different insurance companies despite the multi-policy discount.
Maintain good credit
Your credit rating may affect what you pay for insurance so keep a close eye on it. Credit makes insurance rates more accurate, fair and objective. While the use of insurance scoring varies from state to state and company to company, it is a fact that drivers with long, stable credit records have fewer accidents than drivers who have poor credit. There are various Internet services that allow you to check your credit rating and provide tips on how to improve your score.
Seek out safe driver discounts
Companies offer discounts to policy holders who have not had any accidents or moving violations for a number of years. You may also qualify for a reduction if you have recently taken a defensive driving course.
Take advantage of low mileage discounts
Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who carpool to work.
Inquire about other discounts such as:
Group insurance Good student discounts for young people who take drivers education and/or get good grades Defensive driving
