Car Insurance Quotes | Life Insurance | Health Insurance
If you own a car, you must have auto insurance. That's the law. In many
states, auto insurance is so expensive that it's been a major issue in
political campaigns. After rising less than 2 percent a year in 1999 and
2000, auto insurance premiums shot up by 7.3 percent in 2001 and 9
percent in 2002, according to the Bureau of Labor Statistics.
Helping to moderate high insurance rates is the emergence of baby
boomers into late middle age. That means fewer accidents and lower rates
for them. A second factor working to lower auto insurance rates is that
cars have become safer. In the mid- to late-1990s, a broader range of
cars came equipped with such insurance discount items as dual
side-impact airbags and alarm systems.
Despite those trends, the average annual car insurance expenses for
Americans were $774 in 2002, the latest year available, according to the
National Association of Insurance Commissioners. Because auto insurance
coverage and rates are highly specific, your annual premium could vary
greatly from that amount. Your insurance rates depend on:
Age
Driving Record
Where you Live
Your Vehicle's Age
The Type of Vehicle
Knowing this information, you can still cut your costs. By tailoring
your coverage to what you really need and then shopping around
carefully, you can get a better deal on your insurance.
Before shopping for auto insurance, it's best to understand the
different types of auto insurance coverage. There is liability,
collision and comprehensive- with each accounting for a different part
of the premium you pay.
The collision and comprehensive sections of your policy, which usually
account for 40% (or more) of your premium, involve a deductible amount
that you must pay before the insurance kicks in on each claim. Policies
also might include medical payments coverage for you and your
passengers, regardless of who is at fault, and uninsured motorist
protection in case your car is hit by an uninsured driver.
The liability coverage protects you in case you are at fault for an
accident. You could be liable for damages to the other car, in addition
to medical expenses, lost wages, and pain and suffering for anyone
injured.
The collision coverage pays for repairs to your vehicle, or for the
replacement of its market value if it's totaled when you collide with
another car or hit something — regardless of who is at fault.
Comprehensive auto insurance pays for repairs or the replacement of your
car if it is stolen or damaged in a fire, flood or vandalism.
Most policies also offer lower-cost add-ons such as rental reimbursement
in case your car is incapacitated for a period of time after an accident
for repair, as well as towing insurance.
Nearly all states require drivers to carry liability insurance, but in
some states the amount of coverage required is quite low — say $15,000
to $25,000. No matter what your state regulates, get a policy with
coverage limits of at least $100,000 per person injured and $300,000 per
accident. Lower limits won't protect you because the average
personal-injury award in such cases in recent years has been about
$323,000, according to the Insurance Information Institute. Get at least
$50,000 in property-damage-liability coverage.
The fastest way to cut your premium is to increase the deductible on
your collision and comprehensive coverage. Raising your deductible from
the common $200 or $250 limit to $500 can cut 10 to 15 percent a year
from your insurance bill. Many insurance companies will allow a $1000
deductible, but state law often does not. Compare these potential
savings against the higher out-of-pocket expenses you'll incur if you
file a claim.
For older cars, you may be able to drop comprehensive and collision
coverage entirely; if the car is more than five years old, consider this
option. After all, keeping up costly premiums makes little sense if the
car isn't worth that much. Remember that any payout will be on the
market value only of that car. As a rule of thumb, don't keep up
coverage if the premium for collision and comprehensive is more than 10
percent of the retail used value of the car.
Most states require uninsured/underinsured motorist coverage, which is
often $20,000 to $40,000 in protection. If your vehicle is hit by a
driver who has no or insufficient insurance, this section will cover
injuries to your passengers and other expenses that ordinary health
insurance does not pick up. It also protects you if an uninsured
motorist hits you while you're walking or riding a bicycle. You can
purchase $100,000 in coverage for about $50 or less each year, but it's
usually worth the cost to step up your limit.
On the other hand, you may be able to save on medical-payments coverage.
Regardless of fault in an accident, this coverage will pay doctor and
hospital bills (and sometimes funeral expenses) for you and your
passengers. But check to see if a combination of your life and health
insurance would cover these items. If so, decline this optional feature,
which could save as much as $100 a year.
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