The Basics Of Automobile Insurance

An auto insurance policy is a package of different coverage. Most states require you to purchase a minimum amount of certain kinds of coverage. But if you're interested in protecting yourself from a lawsuit or from hefty repair bills, then it makes sense to buy more than what's required.

The basic types of auto insurance coverage include:

• Bodily Injury Liability. Pays your legal defense costs and claims against you if your car injures or kills someone. Covers family members living with you and others driving with your permission.
• Property Damage Liability. Pays your legal defense costs and claims against you if your car damages another's property. Does not cover your property, including your auto. 
  Medical Payments or Personal Injury Protection. Pays medical expenses resulting from an accident for you and others riding in your car. Also pays for you or your family members injured while riding in another's car or while walking.
• Collision. Pays for repairs of damage to your car caused by a collision with another vehicle or any other object, regardless of who was responsible.
• Comprehensive Physical Damage. Pays for damages to your car resulting from theft, fire, hail, vandalism, or a variety of other causes.
• Uninsured or Underinsured Motorist. Pays for costs related to injuries or property damage to you or your family members and guests in your car caused by an uninsured, underinsured, or hit-and-run driver.

WAYS TO SAVE MONEY ON YOUR AUTO INSURANCE POLICY

State-by-State Requirements

Not all states require you to have automobile insurance, but all states do require you to prove that you can pay specified amounts if you cause bodily injury or property damage while driving. Your proof would be insurance or large amounts of cash or some other security. Without one of these, you may lose your driver's license and registration.

Savings Check List

• Comparison Shop. Prices for the same coverage can vary significantly from company to company. You should get at least three different quotes. Call your state insurance department for ideas about companies and agents to contact.
• Ask for Higher Deductibles. Deductibles represent the amount of money you pay before your insurance company fulfills a claim. By requesting higher deductibles on collision and comprehensive (fire and theft) coverage, you can lower your insurance costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive cost by 15% to 30%.
• No Comprehensive and/or Collision Coverages on Old Cars. It may not be cost effective to have collision or comprehensive coverages on cars worth less than $1,000 because any claim you make would not substantially exceed annual costs and deductible amounts.
• Buy a "Low Profile, Low Maintenance" Car. Cars that are expensive to repair, or that are favorite targets for thieves, have much higher insurance costs.
• Low Mileage Discounts. Some companies offer discounts to motorists who drive fewer than a predetermined number of miles per year.
• Location Considerations. Premium costs tend to be lowest in rural communities and highest in cities.
• Automatic Seat Belt and/or Airbag Discounts. Some coverages provide discounts if you have automatic seat belts and/or airbags.
• Anti-Lock Brakes. Anti-lock brakes improve steering control and stability when a car is brought to a stop, thus reducing accidents. Some states, including Florida, New Jersey and New York, require insurers to give discounts for cars equipped with anti-lock brakes while some insurers have a nationwide discount in place.

Other Discounts.

• Some insurers offer discounts for a variety of other qualifications like:
• No accidents in three years
• Drivers over 50 years of age
• Driver training courses
• Anti-theft devices
• Good grades for students
• Having more than one car insured with that company

Specialty Coverage.

Adding supplemental insurance coverages like towing and labor or car rental reimbursement to your basic auto insurance policy may save you money. For example, for an average of $1 or $2 a month added to your auto insurance, you can purchase coverage that will pay for your rental car while your car is being repaired from an accident. If you have this or some other specialty insurance, be sure to remind your insurance company or agent when you file a claim.