There is a lot that goes into purchasing the correct amount of car insurance. Only about 80% of all drivers have the right amount of insurance to keep them and others on the road safe.
We all want to save money. We all want more knowledge. And hopefully, this blog can help.
Did you know that in more urban areas people tend to not own cars, but use public transportation? In fact, San Fransisco only has a 70% car ownership rate.
Only 50% of New York City residents own a car! However, in Colorado nearly 98% of all residents own a car.
It’s pretty simple. You need to get to work and back. You need to take your kids to school. And unless you have good public transportation, you will need to own a car.
The United States has an obsession with cars
Most households that do own a car have more than just one. Most family residences have at least two cars.
And with each of those car purchases come the cheap car insurance policies as well.
With so many people choosing to own or lease a car, you need will need to have the proper car insurance to go with it. Each state is different, so it is hard to tell you exactly what you will need.
Another trend that is starting to come up around the country is backing down on car purchases and using more transportation such as Uber. Some of the new generation of millennials are moving to the cities and using cars less and less. We may see a reverse trend of car buying in the near future.
But for now, families and commuters across the country depend on their cars. Farmers depend on their work trucks and soccer moms depend on their minivans.
But let’s take a look at the basics; the bread and butter of car insurance and how it works.
You will need it, no doubt, and you will probably want more than just the minimum requirements.
Let’s break it down.
Car Insurance Minimum Requirements
Every state has their own minimum requirements for auto insurance. I will use California as an example because it gives a great reference for what you will probably need in other states.
- Bodily Injury Liability Limits: $30,000 per occurrence/ $15,000 per person
- Property Damage Liability Limits: $5,000 per occurrence
This above amount will only cover the other party involved in your accident. You and your own car will not be covered, so you will probably need more insurance.
- Collision coverage will cover you and your own car’s expenses during an accident.
- Comprehensive coverage will cover other types of damages to your car that are not from an accident. This will also cover theft to your vehicle.
- Uninsured Motorist coverage will make sure that you are still covered for expenses even when the other driver does not have insurance. Trust me, this happens more than you might think. On average almost 20% of drivers do not carry the legal amount of auto insurance, or no insurance at all.
- Towing and Roadside Assistance coverage. We all know what this is, but we all too often disregard it. But this insurance can be well worth the money. Adding this to your policy will in no way break the bank, but it could add serious comfort to your drive. With this insurance you could be covered for a tow, emergency services, and even a jump start. Do you need a tire changed? Sure, no problem.
- You can also buy additional Medical coverage which will cover any medical payments for injuries during an accident.
When Do I Need Car Insurance?
- Anytime you are planning to drive your car out on the road with other humans you need to be covered. This is not just for your own safety, but the safety of others.
- If you have a loan out on a car or if you lease a vehicle, most likely you will need to have full coverage. This means collision and comprehensive coverage as well as liability and property damage.
- You could save by having multiple cars on one policy. Most of the time, insurance companies will reward bundling by giving you a discount.
Ways To Save On Your Auto Insurance Policy
Alright, so here is the deal. We all want to save on our cheap auto insurance.
Most companies have multiple ways you can do this.
- The first is by bundling your insurance. Such as bundling your homeowners and car insurance into one account.
- You can take a drivers safety course which will show that you are now a safer driver out on the road and less of a liability.
- Moving to a more rural area. Now, this might not be in the books for you, but living in a city is guaranteed to cost you more on your car insurance. Why? Because there are more people in cities and these people live closer together. This means you are more likely to get into an accident than if you lived in a less crowded area.
- Raise your deductible to lower your premium.
- Having good credit could affect your policy as well. Try and keep a good credit score.
- There are also low mileage discounts. If you keep the miles on your car low, you could be rewarded financially.
- Certain types of cars also cost more to insure. Usually the larger the engine, the more it costs to insure the car. Also the newer the vehicle, the more it can be to insure.
- Any customized vehicles will cost more to insure as well. The safer the car, the less to insure.
What is SR22 Insurance?
This type of insurance is for people who have had a DUI, DWI, or have had their license revoked.
SR22 Insurance is basically a document filed by your insurance company to the Department of Motor Vehicles stating that you have the proper amount of insurance. You must have this document after getting a DUI.
It isn’t expensive but you will need to keep it filed for three years. At least this is the case in California. There are many states where you do not even need an SR22.
Here are some rough estimates for car insurance. This of course depends on a lot of factors, but you’ll get the idea.
- For a Nissan Frontier (pickup truck) the average nationwide premium is $1,200 a year.
- A Dodge Grand Caravan (minivan) has an average premium of $1,120 a year.
- A Honda CRV (SUV) has an average nationwide premium of $1,170 a year.
- A Mercedes S65 AMG convertible is a whopping $3,835 a year to insure.
- BMW M6 on average has a premium of about $3,200 a year.
- A Jaguar F-type is on average $3,030 a year to insure.
As you can see from the above list, the larger the engine and the faster the vehicle, the more it costs to insure. It is safe to say that if you can afford the high-end BMW, then you can afford the high insurance rates that go with it.
Where Do I Start Looking For Insurance?
The best thing to do when looking for car insurance is to find a broker.
Brokers work for you, the consumer.
But with their connections, they can find you the best possible rates by shopping around. This takes the guessing out of the equation for you. You can even fill out an online quote and have your answer within minutes.
More and more people are choosing this way to purchase car insurance because, well, it takes out all of the work and let’s face it, we are all pretty busy.
We don’t want to spend time on the phone asking question after question.
Insurance agencies that have been in the business a long time, are usually more secure. This might help you when looking for the right one.
Terms You Need To Know
Here are some terms you will want to know before you go forward with your car insurance purchase.
Agent: A person who sells insurance policies and is licensed to do so.
Appraisal: A systematic approach to determining the amount of damage and the cost to repair or claim a total loss. Also determines the value of property to assess taxes and initiate policies.
Auto Death and Dismemberment Coverage: An additional coverage that pays for death or loss of limbs due to an auto accident.
Bodily Injury Liability Coverage: Coverage that pays for the injured party if you are at-fault in an accident. May also cover legal fees, lost time at work, and other related expenses to an injured person.
Broker: A person who compares and finds insurance policies for a consumer. They do not represent a particular insurance company but rather the consumer.
Bundling: Coverage that includes multiple policies such as home and auto which, when combined, can save the consumer premium costs.
Casualty Insurance: Coverage for a person who is killed or injured in an accident.
Certificate of Insurance: A written document that proves coverage is in force during a specific time period.
Comprehensive Coverage: Coverage for loss not caused by a collision such as damage from fire or theft.
Collision Coverage: Coverage for physical damage caused by an accident with another car or object.
Defensive Driving Course: A traffic safety course which improves driving. It may be taken to prevent a citation from being placed on your driving record or to reduce insurance premiums.
Excluded Driver: Any licensed driver that is excluded from your policy. If driving, this person will not be covered in the event of an accident because they have been excluded from the policy.
Full Coverage: Covers liability, collision, and comprehensive on a specific vehicle. Most financed vehicles are required to carry full coverage.
Liability Coverage: Coverage that pays for someone that you have injured or property you have damaged if you are declared at fault.
Medical Payment Coverage: Covers payments of medical expenses such as ER Visits, and Ambulance transportation associated with an auto accident. There is usually a set monetary limit on this coverage.
Everyone has a different idea of what makes a great insurance company. Maybe you are looking for great customer service. Or maybe you want to get the very best discounts available. You could ask ten different people “what is the best insurance agency?”, and they may all have a different take.
I like to go by customer ratings and how much they can save you, the consumer. Most of the time, when you go with a big name insurance company, you are likely to save more money but have less customer service. If you go with a smaller agency, they may not be able to get you the discounts you want, but will have great customer service.
It really just depends.
If you are looking for an insurance company or just want to know more about which ones have great ratings, here are a few to look into.
- One that is rated very high is Liberty Mutual. This company was founded in 1912 and has insured more than 1.5 million customers and has great reviews. This company has great “accident forgiveness” as well as well as a 24 hour claims service. Some people say that Liberty Mutual can be pricy, but it all depends on what you are looking for.
- USAA has a 5/5 customer service rating. They also have a lot of policy options. USAA is however only for military members or veterans, or their families.
- Allstate Insurance has a great overall review. They have great discount opportunities as well as offices all throughout the United States. If you do not bundle, you may find yourself paying more.
- Progressive Insurance usually has really great rates and a huge base of customers. They are not rated the highest by J.D. Power and Associates, but you can do most of your shopping online, which is convenient. You may however be left feeling that you are not receiving as much individual attention as you should.
- Geico is much like progressive in their high-volume online presence. They have great customer satisfaction ratings as well as good discounts options.
Most insurance companies are in the business of making money, so just remember that. It is probably a smart idea to have an insurance broker help you find what you are looking for. It saves a lot of time and stress.
As you can see, there is a lot to know about purchasing car insurance.
And the more educated you are, the more you can save.
For the most part, your broker can guide you through the entire process. But things change, and with every change, you will want your insurance company to be there for you.
From the policy lingo to the major discounts you could be receiving, it is good to know your stuff.
Attaining cheap auto insurance should be simple and straightforward.
Hopefully this blog helped point you in the right direction. Remember that it is better to be over insured than under insured!