What You Should Know Before Buying Cheap Car Insurance
Everyone is trying to save money, and car insurance is one expense we all must endure. Finding cheap car insurance seems like the perfect way to save money, but you want to make sure you are properly covered in the event of an incident. Below, we give a brief explanation of the components of car insurance and auto insurance addons.
First, the primary function of car insurance is to provide financial protection in the event of an accident. At is most base form, auto insurance pays for property or injuries caused to others as a result of the drivers actions. Most states require a minimum amount of car insurance, or proof of financial capability.
Liability Coverage:
Liability coverage is the minimum amount of car insurance required by law. Most people in search of cheap insurance usually opt for liability coverage only. If you are leasing a car you will be required to have full coverage, which will cover damages to the car due to incident or theft.
Each state has different required minimums for the three sections of liability insurance, so be sure to find out your state’s minimums. Minimum liability insurance is usually reported as three numbers. In the case of California the numbers are 15/30/5. The first number is the maximum amount paid for bodily injury to one person. The second number is the maximum paid TOTAL for all injuries resulting from the accident. The last number represents the maximum amount paid for property damage.
We do not advise that people opt for the minimum liability coverage only. As you can see from our California example, the maximum to be paid for bodily injury per accident is $30,000 with a total of property damage not to exceed $5,000. Clearly, if you are at fault and cause an accident involving a car valued at more than $5,000 and containing multiple passengers, your financial responsibility could easily exceed the minimums. This exposes you to a lawsuit for the remaining damages.
Underinsured Motorist Protection:
What happens if you are hit by a person that doesn’t have insurance? Your options are to sue them, or you can purchase underinsured motorists protection. Underinsured motorist coverage protects you in the event you are hit by someone that is either underinsured, or doesn’t have any insurance. This will help pay your medical bills, and depending on the policy, may help with damages to your vehicle.
If you are concerned about medical bills in the event of an accident there is Personal Injury Protection (PIP). PIP will cover a minimum of medical expenses for you or anyone in your car even if you are at fault.
There are also other auto insurance coverages such as Rental Reimbursement and Medical Payments, which we will discuss in another segment.
Full Coverage:
Once you determine how much liability insurance you need then you should consider covering your car in the event of an incident. There are two ways you can go when purchasing insurance for your vehicle:
Collisions Coverage protects you in the event that your car hit something and is damaged. Comprehensive Coverage is what we call Full Coverage car insurance. Full coverage insurance will pay for repairs in the event you hit something, but also covers nearly any other type of damage such as theft, vandalism, fire, etc. Obviously, you will have to pay much more for comprehensive car insurance than for minimum liability.
Deductible:
The final piece of the puzzle is the deductible. The deductible is the amount of money you must pay before a claim is paid. In general, the higher the deductible you choose, the lower your monthly car insurance premiums. Many people go with a higher deductible in the pursuit of cheap car insurance. It is a good idea to make sure that you always have access to enough money to cover the deductible, otherwise you may be at a loss.
As we always say, shop around. The easiest way to find cheap car insurance is to receive quotes from multiple carriers. You are welcome to use the quote form at the top of this page. You only have to fill it out once and you will then receive quotes from multiple carriers.