Automobile Insurance
Auto insurance protects you against financial loss if you
have an accident. It is a contract between you and the insurance company.
You agree to pay the premium and the insurance company agrees to pay your
losses as defined in your policy.
Liability
Coverage Limits:
No one can predict exactly how much you would have to pay if you were
to cause an accident. Ask yourself how you would pay for any damages exceeding
your coverage limits. The higher your limits are, the more likely your
policy will be able to pay all of the damages.
Bodily
Injury liability
How much coverage you need is a function of the assets you'd like to protect.
If you make $30k a year and don't own a home, $50k/$100k should be sufficient.
However If you make more than $75k, own a house valued at more than $150k,
and have $40k in mutual funds you should consider coverage limits of at
least $100k/$300k
How much you'll pay to increase your bodily injury liability coverage depends on several factors, including your age, marital status and driving record. It also depends on where you live. For example, In New York City, where the frequency of bodily injury is higher than in most cities, this coverage would cost significantly more than if you lived in Rochester, NY.
Personal
Damage Liability
This coverage will pay for the repair and replacement of the other guy's
car or property in the event of an accident. State-required minimums are
as low as $5,000, but if you total somebody's Lexus, that won't begin
to cover the damage.
You're better off with a minimum of $50,000 for each vehicle you own. And to be truly safe, you should have a total of $100,000 coverage.
Personal
Injury Protection
This is definitely one coverage you can skimp on. PIP coverage pays for
the medical and funeral costs associated with an accident for you and
your family ? regardless of whose fault it was. But if you a lready have
separate health, life and disability policies, you can probably forgo
this one altogether. Check those policies first, but chances are those
sort of expenses are covered under another policy you already own.
Uninsured
or Underinsured Motorist
This coverage pays for medical and funeral costs for you and your family
in the event you get in an accident with either a hit-and-run driver or
a driver who doesn't have enough auto insurance. These policies usually
cover bike and pedestrian accidents, too. Given the prevalence of uninsured
drivers nationally, this coverage is essential. On average, it costs less
than $40 a year for $100,000 worth and will make up for anything your
medical insurance doesn't cover.
Collision
& Comprehensive deductibles
Higher deductibles lower your premium but increase your out of pocket
expense if a loss occurs.
Collision reimburses you for the full cost of repairs or replacement of your car after an accident. Comprehensive covers you in the event your car falls victim to a natural disaster, vandalism or theft. With either coverage, the lower the deductible you choose, the more the policy will cost you. We recommend that you always choose the highest deductible you can afford ($1,000 is fine). After all, the purpose of insurance is to protect you against big losses, not to make you whole to the last dollar. If you have an older car, you might drop this coverage altogether.
Collision and comprehensive ? which can account for 30% to 40% of your t otal premium ? are cash-value coverages. Which means if your car i s damaged, the most you'll recoup is the Kelley Blue Book value, which declines rapidly as your car ages. Here's a good rule of thumb: If the cost of your collision and comprehensive is more than 10% of your car's Blue Book value, it probably makes sense to drop these coverages all together and save a tidy sum. With most cars, you should approach this limit as the car turns five years old. Understand, however, that if you eliminate the coverages, you'll have to foot the bill if you get in an accident that's your fault, or if the car is totaled or stolen.
You may be required to carry collision or comprehensive coverage if your vehicle is leased or financed. If not, you might consider dropping this coverage and pocketing the savings on premiums. As your car's value decreases
How
Are Auto Insurance Rates Determined?
The rising cost of auto repairs and medical care have significantly impacted
the cost of auto insurance, in recent years.
If an auto insurance company wants to increase its insurance rates, they must submit their request to the state's Insurance Commissioner. As part of their request, they must include enough financial information to justify the rate increase. If our rate analysts are satisfied with the facts provided, then we are obligated by law to approve the request.
In addition to requesting overall rate adjustments, companies may also change the way their rates vary based on a number of factors like claims history, age, address etc.
Auto insurance rates are based on a variety of factors. The amount you pay is made up of a "base rate," plus or minus certain amounts depending on your age, sex, marital status, driving pattern, claims history, geographical area, credit history, and the make, model, and year of your vehicle.
While the weight given to any factor differs from company to company, the following major factors are generally used by all companies: age, gender, marital status, car make and model, claims history, driving patterns, location, and credit history.
Tips
to Save Money on your Auto Insurance...
Shop around before you buy: Often, auto insurance rates
for the exact same coverage will vary from company to company.
Check on cost before you buy a car: The type of car you own will impact how much you pay for car insurance.
Select higher deductibles: Your auto insurance rate is affected by the amount of the deductible you select. For example: Raising your collision and comprehensive deductibles from $100 to $500 can produce savings.
Special
discounts: Ask your agent or insurance company if they offer
any special discounts. Often, discounts are available to young drivers
who are good students or who have finished a driver's education course.
Also, some insurance companies will give you multi-line discounts.
Eliminate duplication: You may have an overlap in coverage, such as medical,
collision, or uninsured motorist property damage.
