American Spinster How-To: Buying Car Insurance
I was going to post something different today, but last night I was involved in a hit-and-run accident, and the fact that I had the right insurance saved me a lot of money and grief.
If you own a car, you need insurance. Many insurance companies today let you build your own policy, advertising incredibly low prices. Be careful of these. They’re not bad companies, but that initial, look-how-much-you-can-save policy they show you when you visit their website probably won’t be enough to protect you.
So what do you need?
Please note: This is just a brief overview to get you started. Laws vary from state to state, so you’ll need to check the requirements in your state. This How-To is meant to give you the vocabulary and rudimentary education you need to ask educated questions of your provider to make an informed decision.
Collision
Collision insurance covers you if you’re involved in a collision with a car or something else, such as a telephone pole or building.
Comprehensive
This covers you for things such as a tree falling on your car, or other accidents that aren’t generally the result of a car accident. A rule-of-thumb way to think about this is that comprehensive insurance covers you for things that happen to your car when you’re not in it. “Comprehensive” is a broad term, so be careful to read the fine print on your policy to see what it actually covers.
Personal Liability
This covers the cost of medical bills to the other car’s driver and passengers if you are at fault in an accident.
Uninsured/Underinsured Motorist Property Damage
This covers your damages if you’re involved in an accident with an uninsured driver, or a driver whose insurance won’t cover the cost of all the damage.
Not all states require all types of insurance, though all states require that you have insurance of some sort. There may be something required in your state that’s not even listed here. When deciding what you want to buy, you’ll want to consider the premium (amount you pay per month for insurance), the deductibles, the value of your car, and any other requirements that may apply in your situation.
Deductibles
Pay attention to your deductibles. That’s the amount of money you’ll have to pay out of pocket before your insurance company picks up the tab. If there’s, for example, if you have a $500 deductible for collision insurance, and you’re in a collision that causes $3000 worth of damage to your vehicle, you’ll only have to pay the first $500 dollars. Generally speaking, the lower your deductible (less money you have to pay before your insurance takes over), the higher your insurance premium. You’ll have to decide what the best balance of monthly cost and potential out-of-pocket expense is for you.
The Value Of Your Vehicle
If your car is worth very little, you probably won’t want to pay a high monthly premium. In some cases, the cost of damage to your car in an accident may be more than your car is worth, making some elements, such as collision, less important to you.
Is Your Vehicle Paid Off?
If you’re still paying off your car loan, you may be required to have a certain type of insurance, such as collision. Check with your lender to see if they have any special requirements.
When choosing your own insurance, you have the option to give yourself a low monthly premium, but often at the cost of better coverage. Fortunately, you can often choose how much coverage you want for each element, and how high or low your deductible is.
The bottom line is, no matter how careful a driver you are, accidents still happen. You may be the victim of another driver, or your car could be damaged by a natural disaster. Your car could also be damaged by someone breaking into it in an attempt to steal valuables. The right insurance will protect you from all of this at a fairly low cost. Be sure to answer all questions truthfully, and always make your payments on time. If you should get into an accident with lapsed insurance, your provider may not have to cover you.
Once you’ve purchased your insurance, make sure you keep your insurance card in your car or in your wallet. Most companies will send you two identical cards, meaning you can keep one on you at all times, and the other in your car.
Finally, when all of that is taken care of, enjoy. You’re a responsible adult with a car and insurance. Drive safely, have fun.
