Good Cheap Insurance
Car insurance can be pricey and times are tough, so naturally customers want to save as much as possible on their policies. With all the different companies, policies, and options out there, however, it can be difficult to sort through the mess to find your way to savings.
While you should always buy the best car insurance you can afford, if you're really tight on cash, there are some services you can cut to lower your rate. After all, if you take a look at your policy, you'll notice that all those added services are raising your bill. Cutting them could potentially save you hundreds of dollars a year.
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Types of Coverage
Use the list below to help you identify what coverage is and isn't necessary. Then call your agent to drop what services you really don't need, and enjoy your lower premium.
Bundle
Purchasing multiple insurance policies through the same company is generally the easiest way to ensure that you're saving as much money as possible.
If you're not married, you can still ask if you can bundle a policy with your partner, roommates, or even parents.
Automatic billing
Most insurers give discounts if you have your premium automatically deducted from a checking account. However, you might save even more if you pay your premium in one lump payment rather than on a monthly basis.
Car rental
While a rental car can be very useful while your car is being repaired, consider if you really will not have access to other transportation in the event you're in an accident.
It's likely that riding a bus or carpooling with a friend could save you at least a few bucks a month.
Better car replacement
Recently, several insurance companies have started offering coverage that gives you the money to replace your totaled car with vehicle that has fewer miles and is one year newer.
However, it's important to remember that you'll only actually use this service if you car is ruled a total loss.
Raise your deductible
A deductible is how much money you must pay for each claim before your insurance will pay anything. So, naturally a low deductible will equal higher rates while a high deductible will equal lower monthly rates.
However, please consider how much you have in savings before raising your deductible to save money. After all, car insurance won't do you much good if you can't cover your portion of expenses after a crash.
Collision Coverage
Collision insurance, as the name implies, covers your car in the event that you are responsible for a crash.
Depending on the value of your car, the annual premium for collision just might not make good financial sense. However, if you still owe money on your car, odds are that your financial institution will require it.
Comprehensive Coverage
Comprehensive coverage picks up where collision leaves off; it covers damage to your vehicle from essentially everything other than a crash including theft and falling objects.
Again, depending on the value of your vehicle, you may find that the annual premium for comprehensive just may not be worth the price. Just like collision, however, you'll probably be required to carry it if you owe money on the car.
Roadside Assistance
Many roadside assistance insurance programs are riddled with fine print that means you might not actually get assistance when you need it. Take a closer look at your policy's fine print and consider if the cost you're paying is really worth it to you.
Loan/Lease Payoff
Otherwise known as "gap coverage," a loan/lease payoff option pays the difference between what your car is worth and how much you owe on the vehicle. However, it's highly unlikely this is a service you'll ever use.
First, you car will need to be totaled for this to kick in. Second, it's possible that you've already purchased this coverage when you bought the car. Third, consider the cost of this coverage versus how much you have left on your loan; that extra monthly payment might not be worth it.
Uninsured and Underinsured Coverage
This section of your bill gets a little sticky. Depending on what state you live in, uninsured and underinsured coverage may or may not be required. Your location will also dictate how this coverage is divided up, how it's handled, and exactly what it covers.
Finally, to add more confusion to the mix, in some states, uninsured or underinsured coverage may be what covers you in the event of a hit and run. In other states, on the other hand, a hit and run would fall under collision. Talk to your agent and check his/her information against your state's laws.
Coverage Levels
When you hear that you must have car insurance, a more accurate statement would be you must carry bodily injury and property damage liability car insurance. This liability coverage, as the name suggests, will pay for the costs of any bodily injury and property damage caused in the event of a car accident that is ruled your fault.
To protect consumers, each state has minimum levels of liability insurance they require. To be clear, these levels are actually the maximum amount an insurer will pay for an accident.
To make matters more confusing, these levels are broken up into three sections:
- How much the insurer will pay for bodily injury per person injured.
- How much the insurer will pay for bodily injury per accident
- How much the insurer will pay in property damage per accident.
You want to have the highest liability amounts you can afford; after all, if you total a Porsche tomorrow those limits can very easily be met. Additionally, it's these limits that will protect you in the event that you're sued after a car accident.
As you're trying to decide on an appropriate coverage level, consider how many assets you have and consult with your agent.
Look at Pay-as-you-drive Options
Also known as Usage-Based Insurance (UBI), this is a great option for careful and infrequent drivers. Generally, to generate your quote, a car insurance company uses a complex risk analysis to guess how likely you are to be in an accident.
In a pay-as-you-drive program however takes three basic steps:
- Device in placed in your car that will track your driving habits.
- The company compiles your driving data
- The company uses the data to determine your specific risk and calculate a custom rate just for you.
It's still a relatively new market, so it's likely that there might be some growing pains. Additionally, multiple states are quickly passing legislation to ensure that the privacy concerns associated with these programs are addressed.
Remember, no matter how tempting it may be, you should never drive without car insurance. Despite being illegal, it's a financial disaster waiting to happen.
First, getting caught driving without insurance can leave you with an expensive ticket. Second, if you cause a crash without insurance, don't just think that the other driver's insurance will foot the bill. Instead, their insurance is likely to take you to court and try to seize any assets you have including savings, 401k, your house, college funds, or more.
Instead, you're significantly better off just trying to save money on an existing policy or finding a cheaper one.
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