Car insurance is a necessary expense, and in many states it is legally required. Purchasing car insurance for the first time can be overwhelming. Here are five things you should know about car insurance that can help you make the best decisions.
Liability Coverage Does Have a Limit
The maximum amount that the insurance will pay out to someone else should you cause an accident is your liability coverage. Many people believe that the insurance company will pay for all damages, regardless of how expensive it gets. But that’s not how it works. Suppose you carry low liability coverage of only $20,000. What happens if you run a light and total out a brand new car worth $50,000? The insurance company will pay up to your limit of twenty thousand, and you will be responsible for paying the other $30,000.
Watch the Per Person Coverage
In addition to having a total amount that will be paid for a single accident, insurance companies also have limits that they will pay to each person involved in an accident. If someone has $150,000 in medical bills and your insurance limit per person is only $100,000 you will be responsible for the remaining fifty thousand. Look not only at the total per accident that will be covered, but also at the amount covered per person.
Go for Higher Deductibles and Higher Coverage
Higher coverages will result in higher premiums. However, these premiums are easily offset by choosing higher deductibles. Chances are that you could come up with one thousand dollars for a deductible if you had to. Ask yourself what you would do if you were facing a lawsuit for two hundred thousand dollars, and your insurance has already paid out all that they would. Lower your premium by raising the deductible, not by skimping on coverage.
Uninsured and Underinsured Motorists Insurance is Important
When you are hit by someone who has no insurance, or only has minimum coverage, you will be the one left paying the bills. You can try to sue the offending party, but if they have no money for insurance, they probably don’t have anything to sue for. Protect yourself by paying for uninsured and underinsured motorist’s coverage through your insurance company. When you have this coverage, your insurance will pick up when there is no other insurance.
Other Ways to Reduce Your Bill
Insurance companies offer discounts, be sure to ask about them. Discounts are available for safe drivers, students with good grades, and employees at some companies. There are also discounts available for having some features on your car, like extra air-bags or a security alarm. Finally, watch the credit rating because a good rating can also net you a better deal on insurance.
Insurance is not an option, it’s a necessity. It protects you, your car, and your assets should you be in an accident. There are ways to bring the cost down, but choosing low coverage should never be one of them. Raise the deductible, point out your solid driving record, and ask what other discounts are available to save money without shortchanging yourself.