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Clear & Simple Home > Singles > Buying a Car > Insurance
Insurance**
You have a car. Now you need insurance. In most states,
that's the law, but even if it weren't the law, it's common sense. We're sure
you're a fabulous driver, but not everybody is, and there's always a risk that
something will happen no matter how careful you are. That is, after all, why
they call them "accidents,"right?
Here, then, is a quick rundown of the essentials of buying
auto insurance.
Types of insurance: When you call an
insurance agent, you'll have a whole slew of options. Here's a handy
translation guide for when the agent starts slinging slang:
- No-fault: If you're in an accident, your insurance company compensates you, no
matter whose fault it was. (Thus the name.) Then they try to go after the
other driver if they think they have a claim. Some states have no-fault
insurance, some states don't.
- Fault: If you live in a fault state, you will be required to prove that you have
"financial responsibility" - you're able to pay for any damage
or injury that you may cause. Either fulfill minimum insurance requirements
or have proof that you have the financial means to pay for such amounts.
- Uninsured
and underinsured motorists: If you're in an accident with someone
who can't pay for the damage, your insurance company covers the
difference. This protects you against damage costs including lost wages,
medical bills, pain and suffering.
- General
liability: This is the coverage the law requires in most states.
If someone causes damage to your property or causes you injury, that
person's insurance will cover it. It also covers damage you may cause to
other people's property and injuries to the people, and it protects you
from lawsuits. Consider getting higher liability coverage than is required
to prevent being underinsured.
- Collision: Collision reimburses costs related to repairing damages to your car due to
an accident. It usually covers you even when you drive a rental or someone
else's car.
- Comprehensive:
This covers a wider swath of incidents, including fire and theft, natural
disasters, explosions, even riots. Required for a lease or a loan.
- Medical
payments insurance: Covers hospital and doctor bills, and even
funeral expenses, that result from an accident. Check first to make sure
it doesn't overlap with your health insurance.
- Personal
injury protection: PIP policies cover medical charges not covered
by the Medical Payments Insurance - lost wages, child care, etc.
What affects the rates? Certainly the kind
of coverage you want and the size of your deductible, which is the amount that
you're responsible for before insurance kicks in (the bigger it is, the cheaper
the rates). But statistics play a huge role, too. Insurance companies hedge
their bets by charging more to insure people with statistically higher accident
rates, and charging less for the good risks. The latter list includes:
- Women
- People
over 25
- Married
people
- People
with good driving records
- People
who drive less
- Certain
vehicles: Big, heavy cars and trucks are considered at lower risk
than smaller, lighter ones. Expensive cars are costlier to repair than economy
models. Sports cars are more at risk than other cars.
Ways to save on insurance: Insurance is a
big expense, but it can be smaller. Just follow a few simple principles:
- Shop
around: As with anything, this is a good idea. Make a few extra
calls, and you could save yourself hundreds of dollars a year. But don't
automatically go with the lowest quote - make sure you're comparing the
identical coverage from one company to another, and get recommendations on
service-oriented agents.
- Raise
your deductible: Like we said, the higher the deductible, the
lower the cost of insurance. Just be careful not to set your deductible so
high that you can't afford to pay it when you have a claim.
- Drop
collision and/or comprehensive on old or cheap cars: If your car
is worth less than $1,000 or so, there's no real point in spending
hundreds of dollars to pretect it from scratches and dings.
- Buy
a boring car: Boring to car thieves, that is. Pick a car that
gets stolen less often and you'll get a much lower rate.
- Low
mileage discounts: Drive less, pay less. Catch a ride with your
friends. Get a job near your home. If you live in a city, take the subway
or whatever public transportation that city provides.
- Equipment
discounts: Cars with automatic seat belts, airbags or anti-lock
brakes cost less to insure. Of course, they may also cost more to buy, so
do the math.
- Multiple
insurance discounts: If you have other insurances, such as
renters or life insurance, with the same insurance company or multiple
drivers on the same insurance policy, you could qualify for a discount.
**Content courtesy of Visa's What's My Score  program. |
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