It isn’t difficult getting really cheap car insurance. It just takes a little effort on your part to get a lot of quotes from different insurers. There are many websites on the internet that make it fairly easy to get a good number of quotes. There is, however, one big mistake that people make when getting really cheap car insurance premiums – and that is not picking their coverage options, car insurance limits abd deductibles wisely.
There are many factors to consider when buying a car insurance policy that really fits your particular needs best. One big factor is what types of coverage do you really need and what limits should you use? An insurance policy includes several types of coverage, some required by law and others are optional. There is one type of coverage that is required by law: liability coverage which pays for both damage to other peoples property and medical bills for other people’s injuries (caused by you). The amount of liability insurance required varies from state to state. See
http://www.edmunds.com/auto-insurance/how-much-car-insurance-do-you-need.html for your states limits.
The types of optional coverage are: emergency roadside insurance (towing), uninsured/underinsured motorist coverage, collision, comprehensive, and personal injury protection (PIP), and medical insurance.
Emergency roadside insurance covers the cost of towing due to mechanical brakdowns, flats, etc. If you already have AAA, you may not need this coverage, although you should comapare the cost to AAA and take the cheapest option, unless you do a lot of travelling and use their travellers assistance (maps, etc.).
Uninsured(UM)/Underinsured Motorist (UIM) coverage protects you if another driver causes damage to your vehicle (or you) and is not insured or does not have enough coverage. Some states require UM coverage. UM coverage also gives you pain and suffering and in some states, property damage coverage. If your car is worth under $1500, you may skip this, also depending on your medical coverage.
Medical /Personal Injury Protection-pays for medical bills in the event that your or your passengers are injured. PIP also covers loss of income and other losses. Not available in every state, and legally required in others. If you already have health insurance, you can probably skip this coverage.
Rental Reimbursement- covers the cost of a rental vehicle while yours is being repaired. This is another coverage you can do without if you want to save money.
Collision Coverage- covers damage to your car if you are at fault. If your car is worth less than the sum of your deductible and the annual cost of your insurance, and you want to save money, you can also skip this coverage. Remember if you do skip this and your car is damaged and it is your fault, you will have to pay for the repairs.
Comprehensive- Covers damages not caused by a collision with another car (e.g. hitting an animal, vandalism, floods, or a cracked windshield). Again, if your car is worth less than the sum of your deductible and the annual cost of your insurance (or you are feeling lucky) and you want to save money, you can skip this coverage, although remember-you will have to pay for the repairs!
Gap coverage is a good idea if you have a new car and it is financed. It pays the difference between what the car is worth and what you owe on the car. Since cars depreciate rapidly, the difference can be thousands of dollars.
Setting limits and deductibles on your policy coverage is another area where you can save money, although some care is required. As mentioned earlier, the legal minimums for liability insurance vary from state to state. There are 3 numbers to consider:
$ limit per person/$ limit per accident/$limit on property damage
for example: $100,000/$300,000/$50,000 would pay up to $100,000 per person for medical bills and up to $300,000 total for all people injured, and $50,000 for property damage (e.g. to other cars). Most experts recommend this for limits for most people’s liability coverage, although if you have no assets, that an attorney could come after, you might go lower. If on the other hand, you are wealthy, it might be worthwhile using higher limits! Cover your assets!
Setting deductibles – if you want to save money, use a higher deductible (say $1000-$1500) but not more than you can afford to pay out-of-pocket for repairs.
In summary, choose your coverage options, limits and deductibles carefully before getting quotes to save time and get the coverage that’s right for you, and remember – getting the absolute cheapest insurance is not always the best idea.