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5 Things to Look for in Car Insurance
You’ve just bought your dream car and you feel overjoyed. But hold on for a minute! Have you chosen your auto insurance policy yet?
The role of car insurance is to protect your car and life against financial consequences in the event of a road collision, car theft, or damage due to natural calamities.
Buying a car insurance requires due diligence. It’s not something that you do in a hurry. And if you want to get a better idea of what you’re looking for, consider reading Travelers Insurance reviews or similar reviews available on the internet.
Without further ado, let’s dive right in and look at the five important things to consider in an auto insurance policy.
Type of Coverage You Need
The first step is to work out the amount of coverage you need. Every state that enforces a mandatory car insurance policy for every motorist stipulates the minimum amount of coverage that you’re expected to have.
Most states expect you to have at least a liability and property damage coverage. Liability protects other motorists from the damage or bodily injury you may inflict.
Property damage, on the other hand, covers damage to other people’s property.
Apart from your state’s minimum stipulations, you can add other optional coverage types, including:
- Personal injury protection
- Comprehensive coverage
- Collision coverage
Another important aspect is the limits for your chosen type of coverage. A policy limit is the total amount your auto insurer will pay you from a covered claim.
Let’s say you have $20,000 worth of collision coverage. If you get involved in a crash, for example, and your car suffers $24,000 worth of damage, then your insurer will only pay you $20,000 since that’s your policy limit. So you’d have to pay the remaining $4,000 out of pocket.
Therefore, it’s important to go for coverage with higher limits. This way, you’ll pay less out of pocket in case you’re involved in an accident.
Discounts are granted when the insurer considers you less of a risk. They can help you lower your auto insurance bill from the get-go.
There are several common auto insurance discounts, some of which you may not be aware of. That’s why you need to proactively inquire from your car insurance representative about the discounts you qualify for.
You should check out the following discounts:
- Multiple-vehicles. This applies when you buy coverage for more than one vehicle from the same insurance provider.
- Multiple-policy. This applies when you bundle your car insurance with other policies like home and life insurance from the same provider.
- Vehicle safety discounts. The presence of safety equipment in your vehicles, such as airbags and anti-lock brakes, can make you eligible for a vehicle safety discount.
- Good driver. Insurers love good drivers who have been incident-free for a while. They may reward them with significant savings.
- Full payment discount. You may be eligible for a discount when you pay the whole amount of your policy term from the get-go.
- Occupational discounts. Ask your insurance agent if your occupation is entitled to a discount.
A crucial element of a good auto insurance coverage is the ease of its claim procedure. You should ask your agent about the policy’s claim process before you settle for the plan. You should also analyze the claim settlement ratio of the policy provider.
The claim settlement ratio will inform you of the number of covered claims they’ve paid and settled in a year. This paints a clear picture of the insurer’s reliability.
A car insurance deductible is the amount of out-of-pocket costs you’re expected to pay for before the insurer comes in to cover the expenses. Some insurers may offer a vanishing or diminishing deductible option.
With this policy feature, the amount of your deductible reduces the longer you stay without being involved in an accident. Let’s say you have a $1,000 comprehensive deductible and you stay accident-free for five years. In this case, you may get an annual $100 reduction. Ask your agent if their coverage has this feature before you settle for the deal.
The Bottom Line
Car insurance coverage is a must-have for any car owner. Even so, don’t overpay for a policy you won’t use.
Check out your state’s car insurance requirements and decide on the amount of coverage you need.
Other things you should look at include policy limits, discounts, claim procedures, and deductibles. Of course, you should shop around from several car insurers to secure the best deal.
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