How to Choose the Best Car Insurance Policy for You
While you’ve likely been purchasing auto insurance for years, the economic downturn has many people looking for ways to save in every area of their lives. Fortunately, your car insurance is one place where you can achieve significant savings. Let’s explore some smart strategies to help you make the most of your policy.
Raise Your Deductibles
One of the simplest ways to reduce your car insurance premiums is by increasing your deductible for comprehensive and collision coverage. By choosing a higher deductible, your monthly rates will drop, but you’ll need to set aside enough savings to cover the deductible if you need to file a claim. A higher deductible also encourages safer driving since you’ll want to avoid paying for costly repairs out of pocket. Typically, higher deductibles are only used for significant damage, which can keep your premiums lower.
Consider Uninsured/Underinsured Motorist Coverage
It’s a smart decision to add uninsured or underinsured motorist coverage, especially since many drivers are still on the road without adequate insurance. If you’re involved in an accident with someone who doesn’t have enough coverage or no coverage at all, this extra protection ensures you won’t be left paying for medical bills and repairs. Although not mandatory in every state, uninsured motorist coverage should at least match the limits of your primary liability coverage, often around $100,000 per individual and $300,000 per accident.
Buy Umbrella Coverage
Umbrella coverage, also known as excess policy, is an essential addition to your car insurance if you have significant assets to protect. This policy kicks in after your primary liability coverage is exhausted, offering extra protection in the event of lawsuits. For most people, a $1 million umbrella policy is a good start, but higher amounts may be necessary if you have substantial assets. This coverage is especially important if you have a teenage driver. You can often save money by purchasing umbrella coverage through your auto insurer—just be sure to compare quotes from different carriers before deciding on the best option.
Look for Hidden Discounts
Many drivers overlook discounts that can help reduce their premiums. For example, a good driving record can lead to automatic savings at renewal time. Other discounts might require action on your part, such as taking a defensive driving course or requesting a discount if you telecommute regularly. Be sure to ask your insurer about available discounts, especially if you have a teen driver—many insurers offer student discounts for good grades.
Hold Off on Buying a Car for Your Teen Driver
Teenage drivers are statistically more likely to be involved in accidents, which can significantly increase your insurance premiums. If you already have two cars in your household, consider holding off on buying your teenager their own vehicle. Adding a teen driver to your existing policy can raise your premiums by up to 50%. By sharing a car, you’ll keep your insurance costs more manageable.
Consider Tort Insurance
If you’re in a state where tort insurance is available, you can typically opt for limited tort coverage at a lower premium. However, full tort coverage is generally a better option, as it allows you to seek compensation for pain and suffering in the event that the other driver is at fault in an accident. Limited tort coverage limits your ability to collect damages for injuries, which could leave you with out-of-pocket costs if you need assistance with recovery.
Assess the Need for Comprehensive and Collision Coverage
If your car is older—generally more than five years old—you may want to reconsider comprehensive and collision coverage. If the car is totaled or stolen, your insurer will only pay the depreciated value, which may not be enough to replace the vehicle. In some cases, the cost of repairs may exceed the value of your car, making these coverages unnecessary for older models.
By reviewing these key areas and making informed choices, you can save money on your car insurance while ensuring you have the right coverage for your needs. Always compare options and ask your insurer about available discounts and coverage options to ensure you’re getting the best deal. Need a place to start? Get free auto insurance quotes by starting here!