Auto insurance isn’t a fun thing to think about, but it’s necessary if you want to drive legally. Not only that, but you need auto insurance in order to be covered in the event of an accident. However, not all auto insurance plans are created equal. Auto insurance can seem overwhelming, but this guide will break down exactly what you need to know about choosing the best auto insurance plan for your needs and your budget.
Understanding Personal Liability Coverage
Personal liability coverage will protect you if you’re found legally responsible for injuring someone or damaging their property. This type of insurance will also cover medical expenses, lost wages and pain and suffering if your actions result in a car accident. The coverage amount can vary from $100,000 up to $1 million dollars. Personal liability insurance generally falls under three categories: bodily injury, property damage and medical payments. Many states require drivers to have at least some amount of personal liability insurance. Be sure to check your state’s laws before making any final decisions about how much coverage you want in these areas.
Understanding Bodily Injury/Property Damage Liability Coverage
Liability insurance protects you if you’re held liable for bodily injury or property damage caused by an auto accident. Liability coverage generally must be purchased as part of a basic liability package that also includes UM/UIM (or underinsured motorist) and medical payments. Liability insurance will protect your finances if you’re held responsible after an accident—typically up to $100,000 per person injured in an accident and $300,000 per accident with a total of $50,000 paid out on each covered vehicle. If you operate more than one vehicle, your policy may have a combined limit ($500,000 total) or one multi-vehicle policy covering all vehicles may be available at an additional cost.
Understanding Medical Payments Coverage
If you have a car, chances are you need auto insurance. But there are a lot of factors that go into choosing an insurance plan, so it’s important to make sure you’re picking out all of your best options. In particular, you want to make sure that your medical payments coverage is up-to-date and appropriate. Medical payments coverage helps cover expenses incurred by people injured in an accident—for example, if they need treatment at a doctor or hospital as a result of their injuries or if they don’t have health insurance. Coverage limits vary but can be worth considering when choosing between plans—and these limits may not be listed with other terms on your policy documents!
Understanding Uninsured Motorist Coverage
This policy is a legal requirement in every state, and it comes with certain thresholds. When you purchase an auto insurance plan, these are very important. Uninsured motorist coverage protects you when an uninsured driver causes an accident that results in injuries. To make sure you’re covered, it’s important to understand how much liability protection you have and what limits your policy provides. This way, if someone else causes a serious accident and is not insured, your medical bills won’t fall solely on your shoulders—you can be compensated for damage up to that limit through UM coverage! That said, uninsured motorist coverage is only available if you purchase it separately; most states don’t require drivers who already have comprehensive or collision insurance plans to pay for UM coverage as well.
Understanding Collision and Comprehensive Coverages
Collision and comprehensive coverages are optional coverage that pays for damage done to your car in any circumstance other than a collision. Collision insurance covers damage caused by another vehicle, tree, guardrail or other objects. Comprehensive insurance covers anything else (including weather) that damages your car – including theft. In most states, comprehensive and collision is sold together as full coverage. The advantage of full coverage is that you can save money by combining these coverages into one policy instead of buying them separately as two individual policies.
Comparing Policies Against Each Other
Before you begin looking at different auto insurance plans, it’s important to determine what coverage you need. There are three types of auto insurance: liability, comprehensive and collision. Liability is your third-party liability—or legal responsibility—in an accident in which someone else is involved. Comprehensive covers damage or theft caused by something other than a collision, such as natural disasters and vandalism. Collision covers damage that happens in a collision with another vehicle or object. All states require drivers to carry some degree of liability coverage and many drivers choose one of these two additional coverages depending on their needs and budget constraints.
How Much Will I Pay?
Although you can try sites like Guesstimate, which estimates car repair costs and insurance premiums, comparing insurance quotes is going to be your best bet. Be prepared with specific information about your car—model year, VIN number, and make and model. Also gather key information about you (like your credit score) as well as other drivers on your policy. You should also know your deductible amount. The more personal information you can give an agent or broker, the better they’ll be able to evaluate your risk and find a plan that works best for you based on those factors. When it comes time to buy auto insurance online or over the phone, ask how long it’ll take for a response before heading off on other tasks or errands.
Should I Even Buy Auto Insurance?
The Department of Motor Vehicles (DMV) keeps a running record of your driving history. Over time, you’ll earn points for certain traffic violations and moving violations (like speeding), and these points can raise your auto insurance rates. To save money on auto insurance, check with your local DMV before you apply—your state may have programs that let you keep points off your record. For example, New York offers a program called Driver Violation Point System (DVPP) that lets drivers take defensive driving courses in exchange for credit on their records. And, it’s smart to keep tabs on your driving record as well; regularly pay attention to what penalties might affect it or what credits you could be earning.
Driving Record Matters Too!
In addition to your car’s make and model, your driving record is also an important factor in determining how much you’ll pay for car insurance. The better your driving record, the lower your premiums should be. If you’ve had a number of traffic violations or accidents in recent years, however, expect steep increases in your premium. In some cases (if you’re filing a claim), it might be best to go with a higher deductible so that your premiums stay down. As always, shop around and compare plans from different insurers before making any final decisions about which one is right for you.