Whether you are in the market for a new auto insurance company, or it’s been some time since you’ve had a car and need to start up a policy again, you definitely want to get the most bang for your buck on your premiums.
One of the most effective ways to be sure you are getting the best auto coverage for your needs is to understand the many common terms and phrases that will be included in your policy. Another is to look for specific discounts that apply to you, or that your insurance company offers.
With this in mind, check out the following provisions that are part of a typical auto insurance policy, as well as some additional tips for getting an affordable premium:
Comprehensive Vs. Collision Coverage
A key part of your car insurance premium will be the amounts you are paying for comprehensive and collision coverage. Comprehensive insurance will cover any damage to your car that results from anything other than a collision. For instance, if someone smashes a window to break into your car, or a tree falls on it during a massive rainstorm, your comprehensive insurance will apply. Different policies include different things, so it is imperative to ask what will be covered in your specific policy. Collision coverage, as its name implies, covers damage to your vehicle that results from being in an accident—whether the collision is your fault or someone else’s. Both of these types of coverages have deductibles, which leads us to our second term to research in advance.
A deductible is the pre-determined amount that your car insurance company will subtract, or deduct, from any settlement you receive for a comprehensive or collision claim. For instance, if that huge tree falling on your car caused $3,000 worth of damage and your deductible is $500, you will receive a check for $2,500. To help get the best rates possible on your car insurance, ask your agent to give you quotes based on different deductible amounts. Typically, a higher deductible will result in lower premiums, so if you can set aside $1,000 into a rainy day fund and have a $1,000 deductible, it can be a great way to get a better rate.
This portion of your premium covers damage that happens to other drivers as the result of an accident. It is often in three parts and will appear as a type of numerical code on your policy—for instance as “100/300/50.” The first number typically refers to bodily injury liability, which covers the cost of someone else’s injury or death from an accident that you cause, and the second number relates to the total amount per crash. In the example above, it would mean you have $100,000 bodily injury coverage per person for up to $300,000 per crash. The third number refers to property damage that happens to another car or property that is damaged during an accident. In the case of the “50” above, this means there is up to $50K in property damage coverage per crash. Each state has different minimum amounts that are required, so ask about your own state’s regulations to be sure you have enough coverage.
Additional Savings Tips
Now that you have a solid grasp of common car insurance terms and how they can impact how much you pay for a premium, it’s a good idea to look for additional ways to save money. For instance, if you are a member of the U.S. military, you and your spouse can qualify for great deals on auto insurance from USAA; the same is true for children of USAA members. You can also ask if your company offers discounts for bundling your policies; if you have your car insurance with one firm and your life and home insurance with another, buying them all from the same place can result in some nice savings.
Knowledge Equals Savings
Finding auto insurance coverage might seem like a daunting task at first. However, by learning some of the common terms you will hear as you shop around and knowing how they can impact your premium amounts, combined with looking for companies that will save you money based on your own circumstances, you should be able to find a new policy that offers great coverage for less money.