Property and Casualty insurance protects the things we own, such as our cars, homes, and businesses. It also protects areas with gaps in coverage such as professional and personal liability. This article will explore many of the major coverage and savings issues about automobile insurance so that you can intelligently review your insurance coverage.
Auto insurance can vary greatly between companies who provide it and from state to state. This information is offered as a general overview to help you become more educated about your choices. Seek the advice of a trusted professional insurance agent.
Important Auto Insurance Issues
- Coverage limits: Discuss with your agent the recommended insurance amounts for all the various categories pertinent to your situation.
- Price Comparisons: Shop around. This is a simple suggestion, but it can save you several hundred dollars per year. Since prices vary, get at least three quotes: from the Internet, from independent insurance agents, and from captive insurance agents. The captive agents can sell products only from their respective companies.
- Documents. Keep the documents from your previous insurance companies in case you are sued after you switch your coverage.
- Group your insurances. Buy your homeowners, auto, business and umbrella insurance from the same insurer, if possible. Many insurers give multi-policy discounts.
- Maintain good credit. This is important because it may help cut your insurance costs. Some insurers are increasingly using credit information (although not without controversy) to underwrite insurance policies.
- Don’t let price be the only factor. If comparing quotes, pay attention to coverage amounts. Many prefer to use a local agent whom they can talk to in person, someone they trust to give insurance advice. Ask friends for recommendations, and contact your state insurance department to find out whether it provides information on consumer complaints. Choose an agent or representative who listens and takes the time to answer your questions
- Use Well Rated Insurance Companies: Choose companies that are financially stable. They should be able to tell you their rating from companies like A.M., Best, and Standard & Poor’s.
- Read your policy. At least review the main declaration page, which describes your personal coverage. Read or at least scan your insurance policy, for you may be surprised what is and isn’t covered. This makes you more aware of things to be careful about and how to file a claim. You might discover that you are insured for things you didn’t realize were covered. This is good to know if something happens.
- Review your coverage regularly and always read any updates that you receive in the mail. Sometimes your coverage is only slightly modified. e.g., when laws change. At other times you might be facing a more significant change.
Automobile Insurance Coverage Tips
- If you owe more on your car than it is worth, check for gap insurance.
- Be sure to cover your car for its intended use, such as business, pleasure, commuting to work (check the actual mileage to work and give the correct number of miles to your agent), youthful drivers, etc.
- Diminished Value Compensation covers loss of market value your car may incur as a result of a serious accident. Ask your carrier if it offers Diminished Value before you buy a policy.
- Make sure your present liability coverage is higher than the minimum required by law. Consider your coverage amount in relation to your income and net worth. Let your insurance agent know your financial circumstances to help you evaluate the correct amount for you.
Money Saving Tips on Auto Insurance
- Before you buy a new or used car, check with your insurance agent for insurance costs. Some cars (sports cars, for example) may be much more costly to insure than others. Stay within your insurance budget.
- Use higher deductibles to reduce your premium if you have sufficient funds in savings.
- Reduce coverage on older cars that have little to no value.
- Look into group insurance discounts from your employer, professional associations, business and alumni groups, and military associations.
- Buy a low-profile car. Cost of insurance is determined in part by the type of vehicle you drive. Some are favorites for thieves or are more expensive to repair. Check with your insurance carrier for suggestions.
- Review your declaration page to make sure that your car is ‘rated’ appropriately. Every vehicle is rated by certain types (e.g., 2-door or 4-door) and high performance models. These things can make a difference if your car is assigned to the wrong type by mistake.
- The greatest way to reduce your insurance costs is to keep free of accidents and tickets. Drive conservatively, don’t take chances, avoid distractions and multitasking, and keep your emotions under control when you are behind the wheel, and you will have fewer tickets and accidents. Be a defensive driver. Driving is not a competitive event that you have to “win.” Safe driving is a matter of life and death. Don’t be super conservative either. Going too slowly, not keeping up with traffic, or staying in the left lane on the freeway may actually increase aggressive driving among other drivers.
Other Possible Automobile Insurance Discounts
- No Accidents
- No Moving Violations
- Driver Training and Defensive Courses
- Anti-Theft Devices
- Low Annual Mileage
- Air Bags
- Anti-Lock Brakes
- Daytime Running Lights
- Student Drivers with Good Grades
- Students living away from home
- Long-Time Customer
- Storing car in a garage
- Driving monitor device
Typical Auto Insurance Coverage:
- Liability Coverage protects your financial situation by helping to pay the for the damage you cause to someone else’s car or body; it is usually required by state law.
- Comprehensive Coverage pays for damages other than collision damage. Some of them may include theft, vandalism, fire, falling objects, weather-related events, animals, and glass breakage.
- Collision Coverage is to help pay for repairs or replacement of your vehicle after an accident.
- Underinsured or Uninsured Motorist Coverage helps to protect you if you’re involved in an accident caused by someone who had no insurance, or if the damages were more than the coverage allowed.
- Medical Payments Coverage is for some of the medical costs if the insured or passengers (or other drivers of your car, depending on the state) are injured in an accident.
- Personal Injury Protection (also called PIP), which is available only in some states, can help you pay for medical expenses and some other personal expenses from a covered loss.
- Optional coverage can include many things, but the most common ones are reimbursement for towing costs and car rentals related to covered claims.
Summary. Property and casualty insurance is not exciting, but it is vital in our society. It is a necessary budgetary expense and it is important to your overall comprehensive financial plan. Driving provides a great feeling of freedom—just ask any teenager. With freedom comes huge responsibility for your car, yourself, passengers, other drivers, and surrounding property. Auto insurance helps insure your ability to cover the expense of potential damages or injuries to people and property. Driving in a car is probably the most risky activity we engage in when we consider all of the variables, such as habits of drivers, weather, traffic, stress and mechanics, and performance of the car itself. Therefore, you are always at risk of something happening unexpectedly. Our automobiles are also one of the most expensive items we own and are subject to a whole host of potential damages or vandalism. Because of the risks involved, auto insurance is one of the most expensive parts of your insurance budget.