Car Insurance Demystified

Of the 50 states, only two—New Hampshire and Virginia—do not require drivers to carry auto insurance. Insuring your car can be both expensive and a little confusing. With so many car insurance companies out there, all competing for your business, it can be hard to choose the right company and the right coverage. In this article, learn what you're paying for, surprising services your policy may offer and how to get the most out of your auto insurance coverage.

Understanding Your Coverage

The most important part of your car insurance policy is the coverage of your family and your assets.

Bodily-injury liability coverage, which is required by most states, pays for medical treatments, rehabilitation and funeral costs. Those covered by the average policy include:

  • You
  • Your passengers
  • Other drivers
  • Other drivers' passengers
  • Injured pedestrians

This portion of your coverage also pays costs that include lawyer's fees and other expenses related to pain and suffering.

To cover the cost of assets, your policy includes property-damage liability. This coverage compensates you for your car or any other property that is damaged, including the replacement or repair of other people's cars or property.

The final piece of minimum coverage is personal-injury protection, also called "no fault" and is an additional way to compensate for the medical, rehabilitation and funeral expenses of members of your household. It also includes coverage for lost wages and in-home care during injury recovery.

Additional types of coverage are available as add-ons, including collision and comprehensive coverage. Collision pays for repair or replacement of your vehicle and is required for anyone financing a new car.

Comprehensive coverage is an added layer of protection that pays for stolen content from your car and damage caused by weather, fire or other losses. This is also often required by financial institutions when purchasing a new vehicle.

Premium coverages include medical-payments, which pay co-payments and deductibles not covered by your health insurance, towing, rental insurance and glass breakage.

Coverage You Might Not Know You Have

If you have a pretty comprehensive policy, chances are that some surprising services are available to you. Check your policy to find out if the following coverages are included:

  • Chipped windshield repair
  • Weather damage repair
  • Vandalism repair
  • Medical coverage if you're hit by a car
  • Medical coverage if you're a passenger in another car
  • Rental car coverage

If these services are offered by your policy, remember to take advantage of them.

How to Get the Most Out of Your Policy

Not all auto insurance policies are created equal. The vast number of auto insurance companies and types of policies make the market extremely competitive, which is good for you.

Follow these tips to save money and establish the best coverage for your vehicles:

  1. Comparison shop. Use the Internet to collect and compare quotes and coverage options.
  2. Choose a higher deductible. The higher your deductible is, the lower your monthly premium will be. If you're concerned about being able to pay a high deductible, stash the savings on your premium into a bank account for a few months.
  3. Think about insurance when car shopping. Cars that have high theft ratings, low safety ratings and are expensive will cost more to insure.
  4. Drive safely and obey traffic laws. A clean driving record means significant insurance savings.
  5. Pay your bills on time. Insurance companies consider your credit when considering whether or not to insure you. A good credit rating means lower premiums and more coverage options.
  6. Bundle packages. Insurance companies give discounts for multiple policies, including insuring multiple vehicles and adding homeowners or renters insurance coverage.
  7. Lessen coverage on older vehicles. As your car gets older, its value lessens. Drop collision and comprehensive coverage to save money.
  8. Drive less often. Insurance companies offer discounts for those who drive fewer miles. Added benefits including reducing your environmental footprint and saving money on gas.
  9. Enroll in a defensive driving class. You may be eligible for a discount if you take defensive driving lessons.
  10. Install a car alarm. Anti-theft devices like car alarms, GPS tracking services and ignition shut-off devices make you eligible for discounts.

Every penny counts these days, and these simple steps can not only reduce your premiums, but also make you more attractive to other insurance companies competing for your business.

Auto insurance is something that everyone has to deal with, but using these tips can help make your car insurance policy less intimidating and less expensive. Sit down with your auto insurance agent, like those at Shanahan Insurance Agency, today to review your policy and make sure that you are getting the most for your money and that your policy covers the things most important to you.


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