The Low-Down on Auto Insurance

by PATRICIA HolmesUncategorized

Angelina Jolie!  Brad Pitt!  Ok, now that I’ve got your attention, we need to talk about something a little less exciting than celebrity gossip, but a lot more important–car insurance.  Although it’s not always that fun to talk about, it can save you a lot of money and protect you against devastating money losses and lawsuits should you get into an accident.  Anything that can save you money can’t be bad, so read on.

The basics

There are six components to auto insurance policies.

1. Bodily injury liability:  When you’re at the wheel and suddenly get into an accident and someone is injured , bodily injury liability is the type of insurance that pays.  If the accident is your fault, or the fault of a family member or anyone else driving your car with your permission, this insurance covers you.  Bodily injury liability is required in every state, however required minimums may not be enough to cover all expenses—you may want to consider increasing your coverage, depending on your financial situation.

 2. Property damage liability: This kind of insurance is similar to bodily injury liability—it pays if you or anyone driving your car with your permission damages someone else’s property.

3. Medical payments:  Just as you may have guessed, medical payments cover medical expenses for anyone injured in your car, no matter who’s at fault. 

 4. Uninsured and underinsured:  Say you’re on your way home at night and are stopped at a traffic light.  Suddenly, someone rear-ends you out of nowhere, and speeds off into the darkness.  You’re too stunned to catch a license plate number, so are you out of luck?  Uninsured or underinsured insurance policies provide protection for situations like these, and also in situations where a driver doesn’t have any insurance.  Again, most states require this type of insurance.  You may have also heard the term “Uninsured Motorist”, which  means the same as  uninsured and underinsured.

5. Collision insurance: Exactly how it sounds—collision insurance pays for damages to your vehicle.  It doesn’t matter whose fault the accident is, or whether it occurred between multiple vehicles or a single vehicle and a tree.  There are a lot of ways to damage your car, and collision insurance will cover you.  Unfortunately, collision insurance can spike your insurance premiums, so don’t pay for more coverage than you actually need. 

6. Comprehensive coverage: Imagine a tornado sweeps across your city, scooping up your car, and dropping it into your neighbor’s yard.  Sound a bit far-fetched?  Perhaps, but comprehensive coverage would pay for this kind of damage.  It also pays for damage to your vehicle from theft, flooding, fire and other kinds of hazards.  These scenarios may seem a bit outlandish, but you’d sure be glad you had coverage if you woke up to a crumpled pile of metal in your neighbor’s front yard—was that really my car?

How much does auto insurance cost?
Auto insurance costs take into account tons of factors:
• The make and model of your car
• Your car’s age
• Your age
• Your driving record (This includes speeding tickets, so give your lead foot a rest!)
• Where you live
• Your gender
• Your marital status
• They type of coverage you select

You could qualify for discounts on your auto insurance if:
• You are a good student
• Your vehicle has certain safety features (for example air bags, antilock brakes, antitheft devices etc.)
• You have multiple policies with an insurer
• You pay in full for a given time period (for example, if you pay for 6 months at a time)

Keep in mind that the higher your deductible (the amount of money you pay out-of-pocket before insurance policies kick in), the lower the premium (the amount of money you pay each month).  A typical deductible is usually around $500, but can be as much as you’re willing to pay. 

If you drive an older car, you might choose not to carry collision and comprehensive coverage.  In other words, if you get into an accident, you’re responsible for the repair or replacement cost of the vehicle.

Different insurance companies often offer the exact same coverage at different prices so…shop around!  A quick Internet search for “auto insurance policies” will produce a lot of options.  A little comparison can go a long way to saving you money on auto insurance. 

Young Driver’s Guide to Auto Insurance

by PATRICIA HolmesUncategorized

Accidents can happen – even to the best drivers. Insurance can help cover repairs to your own vehicle and medical costs. But insurance is your firewall against economic disaster should you cause an accident and there is property damage or injuries to other people. With today’s high medical costs, increasingly expensive car repair costs and high litigation expenses, even a seemingly minor accident could cause a major financial hardship for you. Insurance is not an option. It’s an absolute necessity.

What is Insurance?

Insurance is an agreement between you and your insurance company in which you pay the insurance company a certain amount of money and, in return, the company will protect you from major financial losses due to an accident for a given period of time. The amount that you pay is called the premium, and it could actually be less than the cost of an insurance claim.

What kind of insurance coverage should I get?

This depends on a number of factors. Certainly, you want to get liability coverage to protect yourself against claims in case you cause an accident. However, if your car is older, you might not want to get collision insurance since you might pay more for the premiums than the car is worth.

On the other hand, if your car is new or is a used one that is being financed, the lending institution will probably insist on collision insurance and comprehensive coverage. Below is a listing of the different kinds of coverages a policy may contain and what they do.

Body injury liability – pays medical costs, lost wages, and pain and suffering of other people injured in an accident that you caused. It also covers the cost of litigation if you should be sued.
Property damage liability – pays for other people’s property damaged in an accident for which you are responsible.
Medical payments – pays medical costs if you or your passengers are injured in an accident. There are usually limits specified in the policy.
Uninsured/Underinsured motorists – pays your medical bills and certain other expenses if you’re injured in an accident caused by someone who has no insurance or inadequate insurance to cover the costs. In some states, it will also cover damage to your property.
Collision – pays for damage to an insured vehicle in an accident involving another vehicle or some other object.
Comprehensive – pays for damage to your car not caused by an accident, like theft or vandalism.

How do I get insurance?

You can contact a direct writer either through the mail, over the phone or on the Internet. A direct writer sells insurance directly to its customers through salaried employees. Your other options include going to an independent agent who sells insurance for several different insurance companies. Or you can contact an exclusive agent, one who is under contract to a particular insurance company to sell only that company’s policies.

How can I bring down the cost of my insurance?

  • Drive safely. Nothing drives up the cost of insurance more than a history of accidents and moving violations.
  • Pick your car carefully. High-performance cars are tempting, but not only are they expensive to operate, they’re expensive to insure. Pick a car with a good safety record that’s less expensive to repair and that’s not on the car thieves’ most-wanted list.
  • Increase your deductible. The deductible is the amount of a claim that you pay. Usually, it’s $100, $250 or $500. The larger the deductible, the lower your premium.
  • Maintain a B average for a “good student” discount.
  • Attend a driver’s education course.

Finally, there’s one thing over which you have no control that will lower your premium. Since young people, particularly males, have more accidents than older people, your premiums will be higher. But as you grow older, and if your driving record remains good, you should see your premiums decline.