4 Tips for Choosing the Right Auto Insurance and Coverage Plan

Estimated reading time: 5-6 minutes

For most people, car insurance is a reality. That said, there’s no law requiring you to understand what you’re buying, although it can help you make smarter financial decisions.

Choosing the right insurer is important because the costs of the same coverage can vary by several hundred dollars per year from one company to another. As nerdwallet explains, “Insurers look at similar factors, but they have their own ‘secret sauce’ when it comes to setting rates. So two companies can charge very different rates for the same driver.”

Of course, you also need to consider more than just the cost of coverage. As with most things, the cheapest quote is usually not the best. And the right insurance can protect you from financial hardship if your car is stolen, damaged, or if you’re in an accident that injures you or others.

Before purchasing a car insurance policy – or even before renewing an existing premium – make sure you know how to choose the right insurance and coverage plan.

Look beyond state limits and premium rates

Currently, 48 states require drivers to carry auto insurance — but of course, the law isn’t as basic as a mere requirement. State auto insurance laws also define coverage requirements. According to Wallet Hub, most states require you to have at least $50,000 in personal injury liability, as well as at least $25,000 in property damage liability. Some states (like Utah) also require uninsured or underinsured motorist coverage or personal insurance coverage.

While many people opt for the minimum required limits, having higher coverage amounts is generally a good idea and often requires a relatively minor cost increase.

Instead of just focusing on the monthly premium, focus on other factors that might affect your bottom line, like deductible amount and coverage limits, and then take a more holistic approach to deciding what best suits your needs and budget.

“If you are responsible for an accident and injure someone else or damage their property, you will be held liable for their expenses. Drivers without sufficient liability coverage to pay those costs will still be liable,” says moneygeek. com. “Courts can seize your assets and seize your wages to pay for damages you have caused, so having the highest levels of liability coverage possible is the best way to protect yourself.”

Keep in mind that choosing a reputable insurance company is also important, as you’re likely relying on the company’s customer service and ease of dealing with at some point.

Know the terms

Auto insurance terms can often be a bit misleading. For example, you can assume that if you buy comprehensive insurance, you buy everything you need to make sure you’re covered. Unfortunately, it is not the case. Comprehensive insurance covers damage to your car that is not the result of a collision – think vandalism, hail or bad weather.

Other coverages include collision, liability, bodily injury, bodily injury, property damage, uninsured motorist insurance and others. Before choosing an insurance plan, make sure you know exactly what each coverage includes and, more importantly, what it may not include. Visit the Insurance Institute for Highway Safety for a glossary of the most commonly used auto insurance terms.

4 Tips for Choosing the Right Auto Insurance and Coverage Plan
Photo: loraks/Shutterstock.com

Beware of franchise

If you’ve ever purchased health insurance, you’re familiar with the idea of ​​meeting a deductible before your benefits kick in. Where car insurance differs from health insurance is that there is no annual deductible. Instead, you’re responsible for your deductible each time you make a claim – even if (God forbid) it happens more than once a year.

When shopping for auto insurance, make sure you know how much you will pay out of pocket each time you file a claim. For example, if your collision deductible is $500 and you suffer $4,000 in collision damage, the insurance company will pay $3,500 and you will be liable for $500. Deductibles generally apply to collision and comprehensive coverage, but may also apply to other coverages, such as uninsured motorist.

Customize for your vehicle and your drive

There’s a big difference between insuring a 20-year-old Honda Civic and a brand new Tesla. Although the premium price varies widely, your coverage needs will likely vary as well. For example, if your car still has significant value, you’ll probably want collision and comprehensive coverage — and if there’s a loan on your car, your lender will require it anyway.

However, if your car’s value is low, it may no longer make sense to pay monthly premiums for coverage like property and casualty damage. Although you should understand that you will be responsible for damage to your own car – and possibly suffer a total loss of the vehicle – it may make more sense financially if you pay more premiums over the course of the year. year that your car is really worth it. Of course, you’ll still need to carry car insurance that covers your state’s requirements, but these are generally limited to liability and bodily injury coverage.

Choosing the right insurance will give you peace of mind every time you drive.

If you’ve been injured in an accident, call The Advocates Injury Attorneys at (385) 350-8460, or visit utahadvocates.com for a free consultation.

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