Getting covered by insurance is a very smart thing to do, and that means all kinds of insurance from life insurance to medical insurance to homeowners insurance and auto insurance. That might seem like a lot of insurance that is taking a bite out of your budget but consider the alternative. If an incident occurs where you need to replace, fix or repair something (including your body!), then you don’t want to wipe out your savings to take care of that.
Depending on the state where you live, you might be required to carry a minimum of an auto insurance policy. We are certainly bombarded with plenty of television commercials. From Flo to the talking lizard, we are provided with an array of options. Most folks look for the cheapest that covers the basics. However, there are some other factors to consider with your auto insurance policy.
What You Should Be Covered For
There are many components that can be covered by an auto insurance policy. However, that doesn’t mean the policy you have will cover all those components. It is best to check you policy. Here’s what they should cover:
- Bodily injury liability: If your car injuries someone, then your insurance should cover any claims against you. Note: It’s “your car” that is the issue not necessarily who is driving.
- Property damage liability: This is for claims of damaged property that might be caused by your car. Liability coverage is required in 47 of the 50 states.
- Medical bills: You want to make sure your auto insurance will cover medical bills not only for you but anyone else in your car at the time of an accident.
- Collision coverage: You’ll probably need collision coverage as long as you’re paying off your car. This covers damage up to the value of the car. In other words, if it costs six thousand dollars to fix a car worth two thousand dollars, you might only see the two!
- Comprehensive coverage: As inferred by the title, this covers everything that would happen outside an accident such as theft, vandalism, fire, flood, etc. It’s a good thing to have if you park your car outdoors overnight.
- Uninsured motorist protection: Just because you’re supposed to have insurance doesn’t mean everyone will have insurance. This protects you when you get into an accident with an uninsured person or a hit-and-run incident.
The Deductibles
Within your auto policy will be certain deductibles. The rule of thumb is that the lower the deductible, the higher the premium. You might think it’s a good idea not to be “out of pocket, ” but that might not always be the case. Suppose you get into a fender bender that costs $800 to fix and you have a $500 deductible. That means you’ll only be paying the $500. However, if you file a claim, your rates might go up so in that case, it would be smarter to pay the whole thing out of pocket. So, why have the low deductible in the first place? Bottom line: When it comes to deductibles, put in an amount you can reasonably pay out like $1,000 or $1,500. You’ll feel better about those lower premiums!
One of the most common complaints about auto insurance is paying all that money out and never seeing a return. It all comes down to being prepared. With insurance, it is better to have and not need than to need and not have. That is especially true with auto insurance. Perhaps you should sign with a company that provides rewards for excellent driving. Just be sure you don’t text and drive! Are you happy with your auto insurance?
