Car ownership has always been associated with opening up a new realm of possibilities. Freedom is now achievable within seconds, and you can hit the open road as you’ve dreamed of.
But with that freedom comes several responsibilities, such as car maintenance and insurance. While you’ll need to maintain issues to keep your vehicle in top condition, you’ll need to have an insurance policy before it can hit the road.
Whether you’re a first-time driver looking for a new policy or a seasoned vet wanting to replace their existing one, a lot goes into that decision. Our guide provides further insight into the information you should know.
Decide on Your Coverage
One of the first pieces of information you’ll need to decide on is the type of coverage you need. All states have minimum insurance requirements to drive a car legally.
The standard coverage is usually liability insurance, but your state may require more, depending on their laws. Here are a few insurance policies you may want to familiarize yourself with as you decide on coverage.
Liability Insurance
As mentioned, liability insurance is a basic policy that pays for damages you cause in an accident or towards a person’s property. It also covers your legal fees if the other party decides to sue you after an accident.
For example, let’s say you were texting while driving and crashed into your neighbor’s fence. Your liability insurance would cover those damages up to a certain amount.
There’s a minimum coverage amount that varies by state. But it would be better to buy more than the required number.
If you cause an accident and a person needs medical attention, you’ll need to pay for those expenses. However, if your coverage only covers a certain amount, you’ll have to pay the rest out of pocket.
Uninsured/Underinsured Motorist Insurance
Did you know that one in eight drivers does not have car insurance? Now, what happens when one of these drivers causes an accident? You’ll have to take time off of work to recover from injuries, resulting in a loss of income.
But that’s where uninsured and underinsured motorist insurance come in. These policies cover accident expenses caused by a person with no insurance or a smaller coverage amount. Coverage includes:
- Funeral expenses
- Medical bills for you and passengers
- Car damages (depending on your state)
- Lost wages from lack of work
Some states require uninsured and underinsured policies. Others may not, but it can be beneficial to pair with liability insurance to ensure you’re covered from all angles.
Personal Injury Protection (PIP)
There are times when we may walk away from car accidents unscathed. Other situations may result in injuries. But you can still protect yourself and passengers no matter who caused the accident with personal injury protection insurance.
It typically pays for:
- Medical bills
- Lost work income
- Rehabilitation expenses
- Payment for services as the result of injuries (i.e., house cleaning, child care)
PIP is beneficial because it eliminates the waiting game around lawsuits. Your money can come with certain promptness so long as your insurance provider signs off. However, it’s only available in states with no-fault accident laws.
Collision and Comprehensive Insurance
Repairing damages after a car accident can be on the expensive side, especially if you’re unprepared for the high costs. However, with collision and comprehensive insurance, you can mitigate some costs.
Although these two policies often get sold together, they cover different damages. For example, collision insurance covers car accident damages no matter who was at fault.
So let’s say you were avoiding a deer and hit a pole. Or someone rear-ended you and dented your bumper—you could file a collision claim.
Comprehensive insurance is slightly different. It covers all non-crash damages such as:
- Dents from hitting an animal
- Natural disasters (floods, tornadoes)
- Falling objects
It also covers car theft or theft of car parts. These claims usually come with a deductible, which will reduce the amount paid by the insurance company.
Choosing the Right Deductible
Speaking of deductibles, that’s another essential step in choosing a new policy for your vehicle. To review, a deductible is an amount you pay when you make a claim.
For example, you got in an accident, and repairing the damages will cost $1,500. If your deductible were $500, your provider would pay the $500, and you would pay $1,000 out of pocket.
The driver usually decides how much they want their deductible to be. You can pay a higher amount and have lower monthly payments. Or you can lessen your deductible and raise your monthly expenses.
Now, you may think paying a higher deductible may not be worth it, but it can end up saving you money in the long run. Each year no claim gets made, you can raise your deductible to save money that way.
But you’ll want to make sure it makes sense for you financially. You’ll want to factor in components such as:
- Your current insurance payments
- How many claims do you currently make per year
- The amount you’ll save by changing the deductible
Take a look at how a prospective auto insurance policy aligns with your current financial needs. If everything checks out, you’ll be well on your way to getting your car on the road.
Finding the Right Insurance Company
Once you have some of your financials figured out, the fun part begins—selecting your insurance provider. It will take some time because you are looking at the price and what comes under the coverage.
However, other factors influence what you’ll pay, including:
- Your age
- Where you live
- Numbers of claims made
- Type of car
- Moving violations
- Credit score
Before selecting a provider, it’s essential to have certain information on hand to make the process easier, such as:
- Vehicle Identification Number (VIN)
- Drivers license number
- Date of birth
- A rough estimate of what you want to pay
Now that you have your information on hand, here’s how you go about selecting a provider.
Don’t Settle for Less
Don’t select the cheapest quote you see right away. There might not be full coverage of your vehicle. Yes, saving money is important, but you want to make sure there are no hiccups when you make a claim.
Smaller insurance companies tend to have lower rates than larger competitors because they have lower overhead costs. So they may not cover your accident expenses if the policy didn’t specifically cover them.
Also, you may want to stay away from local insurance companies. Sometimes they may not cover out-of-state accidents, meaning you’ll be liable for any damages caused.
Don’t Overextend
Most insurance companies goal is to make as much money as possible. They do so by selling you more coverage than you might need.
Although it might not be a bad idea to have a little bit over the recommended minimum amount, you don’t want to over-extend yourself. There’s no need to get a high coverage amount if you don’t have an expensive car.
You don’t want money troubles resulting from a lack of payments. Agents will try to take advantage of unassuming customers, putting you at financial risk. Take the time to shop around for quotes from various companies and see what’s affordable.
Read Customer Reviews
Customer service is necessary when selecting an insurance company. You want to work with a company that assures the claim process will go smoothly, offering assistance on all queries regarding the accident.
To find a suitable partner, check out their website to review customer testimonials if they’re available. You can also do a quick Google search of a company you’re interested in and see what other customers say.
With more information available, it’ll be easier to decide which company you want to partner with. If there are multiple negative reviews, it might be best to stay away from that provider.
Get a New Policy By Shopping Smartly
Finding a new policy for your car can be challenging because there are various coverages. But take a step back and think about your current situation.
How much do you pay in insurance currently? Are there any combo packages you would like to use to ensure you’re fully covered? Is your current car worth a new auto policy?
These are some of the questions you’ll need to answer as you sift through providers. However, review our guide to help you make an informed decision.
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