What To Consider When Determining How Much Auto Insurance You Need

by Hank

Some people, when buying auto insurance, only think about the minimum coverage and do not look at their insurance needs beyond the minimums required by law and their budget. However, before you speak to an agent, it is a good idea to take some time and assess the type and amount of car insurance that you will be requiring in order to protect your assets. Also, it is good to find out what items are not covered. That way, you will not incorrectly assume that you are being protected for something that, indeed, is not included in your car insurance policy.

What Is Covered With Basic Insurance Coverage

In most instances, an auto insurance policy will provide coverage for:

    • Any liability for damages or injuries sustained by others, which is a result of an error on your part
    • Any injuries or damages that result from being hit by someone who does not have enough insurance to cover your expenses and damages
    • Any injuries or damages that come about by being in an accident with an uninsured driver

Other Coverages Beyond The Basics

Policies can also include collision coverage, which includes protection for any damage to your car resulting from a collision. Comprehensive insurance safeguards your car from hail, flood, fire, or theft in most cases. Additional insurance may also pay your medical expenses if you or a member of your family is injured in your car or by another vehicle. Typically policies will not cover such items that are not permanent fixtures of the car such as CD players, navigational systems, stereos, and cell phones. Regular car insurance will also not cover regular maintenance costs. You may want to consider an extended warranty if you want coverage for maintenance costs.

Questions You Should Ask Before Buying Car Insurance

When you speak to an agent, you will need to ask him certain specific questions. For example, you will want to ask:

    • What is the required coverage?
    • What are the limits?
    • What does the plan not insure?
    • Will I need comprehensive or collision insurance?
    • What discounts are available? Do you have multiple policies with the same insurer?
    • If I am in an accident where I am not at fault, how will my payments be affected?
    • How does my credit rating influence the premium payments?
    • Should I be at fault in an accident, how will it affect my premium?
    • What are the items on my driving record that will increase my premium?

Shop Around Before You Make a Commitment

As different insurance companies charge different rates with respect to premium coverage, you need to comparison shop to make sure that you are making the best choice for your hard earned money. Like a government contract, it is best to obtain at least three quotes before you make a decision. Give companies information with regards to your gender, marital status, age, make and model of your car, and driving history so quotes and comparisons can be made. Multiple pulls of your credit report will not overly hurt your credit score if they take place within a short period of time because companies such as Fair Isaac which run the myFico credit score allow for you to not be penalized for shopping around.

If you are currently shopping for auto insurance, do not automatically resort to buying the minimum amount of coverage. Consider buying more than the required minimums. Protect yourself with the best insurance for your situation at the best possible rate. Shop around for insurance. Get several quotes and review the coverages before signing on the dotted line in order to save money while still protecting yourself and your family.

{ 1 comment }

Jerry September 24, 2010 at 8:16 pm

This is a great primer about insurance, and it is definitely needed. When I started college I had no idea about what insurance paid for, and I thought it would lead to additional coverage against repairs… like a warranty of sorts! Imagine my chagrin when insurance didn’t cover the repair of an electric driver’s side window.

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