An auto insurance policy is mandatory if you own a car. The policy that is right for you may not work for someone else. Auto insurance coverage covers many different things. Only one aspect of auto insurance coverage is required by law: liability while driving. There are other types of coverage that you can add to your vehicle. These include flood, fire, theft, comprehensive, and even glass. Your deductible is another aspect that can affect your premiums.
The only required auto insurance in every 50 states is liability. It covers you if you are involved in an at-fault car accident (eg. Your fault. This covers the victim. This coverage can save you money as things happen quickly. If you are involved in an accident at fault and someone is seriously hurt or worse, you’ll likely have to pay the rest of your lifetime. This is why the minimum liability coverage is now one million dollars. It would be quite a burden for most people to pay this much.
You must consider your vehicle’s age, value, and deductible when deciding on theft and fire. Is it worth the extra cost to have this coverage if your 1995 beat-up car is only going to cost you 1000 dollars to replace, and there is a 500 dollar deductible. It is unlikely. It is worth it if your sports car costs $200,000 and you need to replace it. You should also consider the cost of replacement. Do cars get stolen in your area? Do you have a history of driving accidents? You might consider a lower deductible, but higher premiums if you answer yes to any of these questions. You can choose to have a higher deductible on your auto insurance. This could be 2500 dollars or 5000 dollars. A new sports car worth 200,000 dollars can be bought for only 5,000 dollars. That’s a better deal than having to pay the full 200,000. A higher deductible can save you money. This is true for collision coverage. Be aware of deductibles. Is it worth saving 500 dollars now if your rates are going up in the future?
When looking for auto insurance, another thing to consider is whether your vehicle is owned or financed. In order to protect your vehicle from theft or fire, many financial institutions will require that you have complete coverage for auto insurance. They won’t allow you to stop paying your car bill just because the vehicle is damaged.
