The way to find the best car insurance coverage is to first take a look at who you are and what kind of car you own. Are you a young man with a an old beater and no other real financial assets? Or are you a middle-aged professional with a household full of licensed young adults and multiple newer vehicles? Do you live alone and depend on a single car to get you to work and back and everywhere else? Do you live in a no-fault insurance state? Have you had multiple accidents or traffic tickets? Do you drive over 15,000 miles per year or do you just use your car to run to the supermarket and church? The answers to all these questions will determine the best way to cover you and your automobile at a price you can afford.
Auto insurance in the U.S. is divided into four basic parts: Liability coverage to pay for the other guy’s vehicle and personal injuries if you are at fault in an accident, property damage coverage to pay for your own auto damage, rental car coverage to help defray the costs of renting a vehicle if yours is out of commission due to a covered loss, and towing/roadside assistance coverage to dispatch a tow truck to pull you out of a snowbank or jump-start your car in cold weather. If you live in one of the few no-fault insurance states in the U.S. you will also have personal injury protection provided for yourself in the event of an auto accident, but most state auto insurance policies do not require this coverage. In many non-no-fault states you can purchase medical payments coverage of up to $10,000 to cover you and the occupants of your vehicle in the event of an accident, regardless of who is determined to be at fault. Depending on your personal circumstances, medical payment coverage may or may not be worth including.
For instance, in the example of the young man with no real financial assets except his old car, it makes no sense to carry any more auto insurance than the state minimum liability limits. Even if found at fault in an accident, a young man will not have any assets to lose and is not likely to be sued for this reason. Property coverage is not necessary either, since the payout on a totaled car over ten-years-old is going to be so low as to make paying for the coverage impractical. Young men are in the most expensive rate class because statistically they are the most likely to be involved on an auto accident, so carrying minimal insurance will help to keep the costs in check. A young man with a new Corvette will have to budget quite a lot for insurance. Anyone thinking of buying a car should always call several insurers for quotes on the cost of a policy on that car well before it is actually purchased, so as not to get a nasty surprise after the papers have already been signed.
A family with multiple vehicles and teenagers who drive needs to carry at least $300,000 in liability insurance on their auto policy, more if possible. Not only do teenagers get into more accidents than adults, they also open their parents up to liability suits and the potential attachment of real estate and property. Adequate liability coverage is therefore essential, and fortunately is not usually the most expensive part of the policy. Deductibles on the property coverage should be kept as high as possible to defray costs, and the children should be encouraged to drive the older vehicles that do not need property coverage. Families would be well advised to carry some medical payments coverage as this is often required by schools if parents want to ferry kids around for school trips, or if families take turns carpooling the kids to school. Many companies give substantial discounts for teen-aged drivers who maintain a ‘B’ average or better and have taken driver training, and professional heads of households can often get a good discount on their auto insurance through their alumni association, professional affiliation, or workplace.
If you are single and living alone with only one vehicle, be sure you include rental coverage and towing on your policy. These coverages are inexpensive and can be real lifesavers. Recently I was driving north in a snowstorm, and was suddenly whipped into a ditch after a fender bender. I was in the middle of nowhere at 5:00 in the morning. Snow was coming down hard, sideways, and it was dark. I pulled out my cell phone, called the number on my insurance card, and a tow truck was there within 20 minutes. The insurance covered everything, it didn’t increase my premium (rental and towing claims rarely do), and the coverage itself cost me $36 per year. Worth every penny!
Of course you should get multiple quotes, but resist the impulse to cut your coverage to the bone just to save money. Ask if the policy period is for a year or six months, and go with the year policy if you can to avoid a biannual rate hike. Choose a company that fits your personality and needs in terms of accessibility. Young people are often comfortable with around-the-clock 800-number customer service, but older drivers often prefer to be able to step into a local office and speak with their own personal agent.
Finally, read your policy and read all updates to the policy. Never try to save money by voluntarily waiving the uninsured motorist coverage, since this is an inexpensive coverage that protects you if you are hit by someone without insurance, something that happens all the time. Also, every year or two, get some new quotes just to make sure your company is still reasonably priced. Auto insurance is extremely competitive and rates change yearly based on claims filed per state, a company’s growth plan, medical costs, and many other reasons. Being realistic about your circumstances and your needs and being forearmed with an understanding of basic auto policy coverages, will insure that you get the best coverage for you at an affordable price.