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Buying Car Insurance
    Buying Car Insurance

Finding the Right Car Insurance is Simple


Dennis Shortino

Buying insurance is an important part of vehicle ownership. The more you know beforehand, the more likely you are to spend wisely. The purpose of buying insurance is to transfer your financial risk to the insurance company. In return for your premiums (your money), an insurance company will contract the policy with you to pay for certain losses. When an acceptable claim is submitted, the company will pay you a benefit according to the provisions of the policy.

To get the best insurance for your needs, it’s important to understand the different types of coverage available. Note: Many states require motorists to have proof of a minimum amount of insurance before either registering your vehicle, or when renewing your driver’s license. Most of these states also require that you carry proof of insurance on your person or in the vehicle.

Liability
Liability insurance covers your legal obligation to compensate others that are harmed in some way by your actions. Vehicle liability insurance includes:

  • Bodily Injury:
    Pays for injuries to others causes by operating your vehicle.
  • Property Damage:
    Pays for damage to other people’s property, caused by operating your vehicle.
  • Uninsured/Underinsured Motorist:
    Pays for damage to your property cause by the other motorist who may have none or inadequate coverage.

Liability claims are limited to specific maximum amounts by your policy.

Personal Coverage
Personal insurance coverage may include:

  • Medical Payments:
    Pays for medical expenses that occur from injury during a collision. May also include a funeral benefit.
  • Death, Dismemberment, Loss of Sight:
    Pays a specific amount to persons named in the policy suffering these types of injuries.
  • Disability/Loss of Earnings:
    Pays part of the insured’s wages while disabled.

    Of the three types, medical coverage is the most common. The other two type of coverage may come from other policies or employee benefits.

Vehicle Coverage
Vehicle insurance coverage that pays a benefit to repair or replace your vehicle includes:

  • Collision:
    Pays for the cost of repairing your vehicle when damaged by a collision.
  • Comprehensive:
    Pays for the cost of repairing your vehicle when damaged by causes other than a collision. This includes theft, vandalism, fire and flood. Theft of personal items left in your vehicle is covered separately on your homeowners or renter’s policy. Both collision and comprehensive coverage is usually required by lenders before they will agree to loan money on a vehicle.

Note: Both collision and comprehensive coverages come with deductibles. You will pay up to the deductible amount stated by the policy for each incident. If the repair is a greater amount than the value of the vehicle’s market value, the vehicle is considered to be a total loss and you are paid its appraised value instead of repair.

$ Tip:
Increasing the amount of the deductible can save a substantial amount of policy cost, but be sure you keep the cash on hand to cover that amount in the event of a loss. If you drive an older vehicle of little value, you may want to consider not purchasing collision coverage. This will reduce your total premium.

  • Road Service/Towing:
    Pays for hiring a tow truck when our vehicle is incapacitated by a collision or a break-down. It may also pay for roadside repairs to get it running. However, it doesn’t pay for repairs performed at the repair shop. Similar benefits are available from auto clubs.
  • Loss of Use:
    Pays a specific amount per day for a rental vehicle or public transportation while your vehicle is being repaired. It may also pay for meals and logging expenses if you're over a certain distance way from home.
Rates
There are many factors insurance companies used to set their rates and each company uses a different method. Where you live, how far you drive to work, and whether you use your vehicle for business or not, will each have a different effect on the cost. Getting quotes on insurance from a variety of companies is the best plan. It may turn up the company using the most economical rating method for your situation.

Service is a factor often overlooked when shopping for insurance. The service provided by a good agent can not only save you money, but also provide help submitting any claims properly. A good agent can explain and help you understand what’s covered and what’s not.

$ Tip:
When shopping for a new or newer vehicle, check the cost of insurance for that model vehicle. If the one you're buying is considered to be a high-performance model, you may save a lot of money on insurance by buying a different model.

The information contained in this article is for informational purposes only and is not intended as legal or professional advice.