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Driving in America
Car insurance
In America car insurance is insures not the car, but
the driver. In other words, if you have car insurance, and your wife doesn't if
she makes an accident she (you) will have to pay for the damage. So the
insurance coverage is related to persons.
Basic auto insurance policies are made up of a
combination of the six types of coverage:
1.
Collision: Covers
the physical damage done to your vehicle as the result of an
accident. This covers your property in accidents in which you
are at fault, like a single car accident or collision with a
stationary object.
2.Comprehensive: This covers
repairs or replacement of your vehicle from damage caused by
"non collision events", such as damages resulting from fire,
theft, vandalism, and most acts of God.
3.Liability - Bodily injury: This covers injury or death caused by a
vehicle driven by you or someone covered as a driver under
your policy. This coverage pays for both the claim against you
and the cost of your legal defense. If you are found to be
liable for a higher amount than the policy you bought, you
will have to pay the difference. In such a litigious society,
it seems sensible to purchase the highest level of coverage
that you can get your hands on.
4.Liability - Property
damage: This covers damage caused to another persons
vehicle or property. This is not limited to damage done to
anothers vehicle. If you drive through someones yard and
demolish their garden shed, it would be covered by Property
Damage Liability, up to the limit of your liability.
5.Medical payments or Personal Injury Protection (PIP): Covers
you, the members of your household and your passengers for
medical expenses resulting from an automobile accident,
regardless of who is at fault. Usually limited to $5,000 -
$10,000 in most policies.
6.Uninsured motorist:
Bodily injury: Protects you and occupants of a covered vehicle
in an accident in which the owner or operator of a motor
vehicle who is legally liable does not have insurance.
Property damage: This coverage pays you for damage to your covered
vehicle in an accident in which the operator of a motor vehicle who is legally
liable does not have insurance.
The combination is deternmined by the state in which
you reside. Check your minimum states requirements
here.
How to Save on Car
Insurance
1. Comparison
shop: Most people are aware that the insurance industry is highly
regulated. However, few are aware that each company determines it's own policy
rates based on their own unique set of crtieria (in most states). The result is
insurance prices for the same coverage that can vary by $100s, sometimes over
$1000 from company to company.
The best place to comparison shop is online, as it is far less
time consuming than calling from agent to agent for quotes. There are Internet
sites that will provide you with several comparison rates from highly rated
insurance companies. The two best sources I have found are Progressive and Consumers Car Club.
2. Raise deductibles: deductibles are the amount of money you
are paying from your own pocket before the insurance company
starts paying. For e.g. if you have a deductible of $200 menas
that you pay the first $200 from your own pocket, and after
$200 the insuramce company pays the rest.
Requesting higher deductibles on collision and comprehensive
coverage can lower your insurance costs substantially. Raising your deductible
from $200 to $500 could result in a reduction in these premiums by 15% to
30%.
The reason why should you request this: most drivers will go years
between claims and the savings realized in the first 12 months will cover the
difference in out of pocket between a $200 and $500 decuctible.
3.Reduce coverage on older
cars: Vehicles lose value rapidly as they age. After
vehicles reach a certain value point it will not be cost
effective to carry collision or comprehensive coverage
policies on them. You don't want to pay expensive insurance
for a low value car, do you?
4.Take advantage of
discounts
: There are several discounts that insurance companies offer provided you
meet certain requirements. Never assume that you are receiving
these discounts. Determine which ones you feel apply to you and then
contact your agent to determine if you qualify and always ask for the discounts.
Common discounts:
More than 1 car on the same policy
No accidents in 3 years
No moving violations in 3 Years
Drivers over 50 years of age
Successful completion of a driver training course
Anti theft device(s)
Low annual mileage driven
Vehicle equipped with automatic seat belt(s) Vehicle equipped with air bag(s)
Vehicle equipped with anti-lock brakes
Good student (driving teens with B average or better)
Auto and homeowners coverage with the same company
College students living away from home without a car
Not all companies offer all of these discounts, if your does not, it is likely you will be able to save by comparison shopping.
5.
Buy the "right" car: Some cars are much more expensive to repair than
others and thieves tend to tagret some vehicles much more than
others. These are significant factors in the cost to insure a
vehicle. I do not believe that an auto insurance policy should
determine your quality of life, but be aware of these factors.
As a sidenote, if I recall correctly the #1 car on the stolen
car list is the Honda Accord.
6.Live in the right place: Where you
live is a major factor in the cost to insure a vehicle. Costs tend to be lowest
in rural communities and highest in large metropolitan areas. I don't believe
that auto insurance should be the determining factor in where you choose to
live, but you should be aware of the potential added costs to insure your
vehicles prior to making a move.
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