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Best Ways to Save on Auto Insurance

Your car is probably the second biggest purchase (and debt) that you have after your mortgage. Whether you have decided to purchase a brand new vehicle or lease the vehicle you need to have comprehensive car insurance to protect your investment.

Also, keep in mind that most banks and car makers will not let you acquire financing or a lease without insurance. Most states require your vehicle to carry insurance to protect you and other drivers from the financial perils of being in a fender bender.

Even if you are driving a vehicle that you own outright you still need to protect your investment from damage and protect yourself from the surprise unfortunate accident.

What Happens if You Do Not Carry Car Insurance?

Not only will you be personally financially responsible for the cost of repairs to your vehicle and the damage to any other property you can also be in legal hot water if you live in a state where car insurance is mandatory to carry.

For example, if you are in a car accident and found to be driving without valid insurance, many states also impose criminal or administrative penalties. Almost every state will punish you by fine of hundreds or even thousands of dollars. In addition, the Department of Motor Vehicles in most states will also impose penalties that include the suspension or revocation of your driver’s license, usually for a period from a few months to one year. It simply isn't worth the risk.

Do you have a disposable income to waste on repairs? Most of us are not prepared to spend thousands of dollars when an accident occurs. After all, the average property damage cost of a car accident is not cheap!

According to the National Safety Council, the average cost of a typical 'fender bender' is approximately $9,300. That estimate is based on no injuries. Hold on to your seat for this next fact. Let's assume you cause an accident with an injury and you are not insured. You may be financially responsible for the cost of the repairs to both vehicles and medical expenses.

Medical expenses with disabling injuries, average out to $80,700 per crash. If the injured party retains an injury lawyer you can expect the expenses to rise much higher possibly crippling you financially for the rest of your life. Again, it simply isn't worth the risk.

What Can Having Car Insurance Do for You?

Think of car insurance like an affordable protection plan. Spend a little, to save a lot! We all want to avoid any accidents while driving. The reality is that regardless of our personal driving experience accidents can and will happen. Often times you may not be the person to cause a motor vehicle accident but you need to be protected in case you are. Also, if the other party is not insured you can still recover the expenses of repairs through your insurance policy.

Being involved in a vehicle accident is very stressful. Human nature takes over. Often times you or the other party is overly emotional. Having car insurance helps take out some of the 'unpleasant' tasks required after being involved in any accident.

For example, your insurance company acts as your 'broker'. It will be the insurance companies responsibility to work with another driver's insurer, walking you through the claims process, helping you find a great repair shop, and getting your claim settled quickly and fairly.

Also, if your 'fender bender' was with the dreaded 'uninsured driver', your insurance company can help you recover costs through your policy's uninsured motorist coverage. Without the help of your insurance company, this can be a nearly impossible task.

Another important aspect of car insurance is ability to pay your medical bills! Hopefully, you have health insurance coverage but not all health insurance is created equal. Being in an accident is stressful enough you don't want the added stress of looking at a high medical bill as a result of the accident. Car insurance can help pay for things your medical coverage might not — possibly including care for accident-related injuries, dental work, funeral costs, or extended nursing care during your rehabilitation.

Luckily, most insurance plans offer coverages that cover injuries you sustain as a driver or passenger (and in some states, personal injury protection coverage is required).

What Kind of Car Insurance Do I Need?

Car insurance plans are broken down into a few basic plans. The type of plan you choose is determined on what kind of coverage you need to fully protect your vehicle and the expenses when you happen to cause the accident. We will start with the two most basic and popular coverages, but there are many other additional types.

Liability Insurance

Liability coverage is exactly as it sounds. It essentially will cover only what you are liable for. What exactly does that mean? Read on.

Protects the person you hit if an accident is your fault. It's divided into three numbers representing dollar amounts for three types of liabilities.

For example, if you purchased an auto liability policy of 25/50/15, you would have $25,000 of bodily injury coverage for one person injured in an accident, $50,000 of bodily injury coverage for everyone injured in an accident and $15,000 of property damage coverage.

Keep in mind that if you're at fault in an accident and someone else is injured but your auto liability doesn't cover all of their medical bills, chances are they - and their lawyer - will come after you for the remainder of the amount.

Comprehensive & Collision

Typically, Comprehensive and Collision coverage covers you much better then Liability coverage does. For example, most banks and car makers require you to have comprehensive coverage if you are leasing or financing a new vehicle.

Remember, when leasing or financing a vehicle the bank owns your car. They want the best possible protection on their property. Having comprehensive insurance coverage will ensure that any damage done to the vehicle regardless of the fault will be covered and repaired.

Comprehensive also covers non-accident-related damages to your vehicle.

For example, damages caused fire, flood or hail. Collision covers damages to your vehicle caused by impacts with other cars or objects. Comprehensive can also cover you if you are hit by a non-insured driver.

If your vehicle is valued over $4,000 you should almost always consider having comprehensive insurance coverage.

How Much Will Car Insurance Cost?

We encourage you to shop around for the best rates and coverage. There are multiple plans and coverages. Some cover just the bare necessities while others have incredible coverage. Be careful. Make sure you fully understand the coverage you are paying for. Understand what scenarios are covered and what out-of-pocket costs you may accrue.

On average you can expect to pay somewhere near $907.00. This is based on national insurance average data collected in the United States in 2014. Also, the younger you are....the higher your insurance costs will be. As we stated around for the best price and be sure to ask lots of questions!

How Can I Save Money When Buying Insurance?

There are many discounts available when buying car insurance. Make sure to speak to your insurance agent about the discounts and incentives they carry for their potential customers. You can save big if you fit in any of the following categories:

  • Accident-Free Driver - The better you are as a driver, the more money you stand to save in coverage costs. No prior accidents mean lower insurance costs.
  • Fiscal Driver - Have a good credit score! Insurance companies believe that drivers with established and stable credit records have fewer accidents.
  • Safe Driver - The tech in your car can save you money! If your vehicle is equipped with safety equipment designed to reduce the risk of injury or theft, such as antilock brakes, automatic seatbelts, running lights or an alarm system.
  • 'Little Ol Lady' Driver - Only drive to church on Sunday? You can save! Many auto insurance companies offer low mileage discounts for people who drive less than the average number of miles per year

Remember, to always talk to your potential insurance company and get the best discounts possible! You could save hundreds just by asking for discount details.