Key Considerations For Choosing Auto Insurance

Auto insurance is a necessity if you own and drive a car. It can, however, be challenging to find the right policy for your needs and budget, given the numerous options and coverage types available. When purchasing auto insurance, it is crucial to first consider your state's requirements for bodily injury and property damage liability coverage. After that, you can decide what additional insurance you may need based on factors such as age, driving experience, and vehicle type. It is also important to compare quotes from multiple providers and to be aware of the various discounts offered. Finally, remember to review the financial health of the insurance company and ensure there is no lapse in coverage when switching providers.

Liability insurance

Liability coverage typically encompasses two main components: property damage and bodily injury. Property damage coverage pays for repairs to the other driver's vehicle, provides a rental vehicle while their car is being repaired, and covers damage to buildings, fences, or other structures, as well as personal property inside the vehicle. It also includes legal fees if you are sued for property damage. Bodily injury coverage, on the other hand, provides payment for medical expenses, rehabilitation, and legal costs for individuals injured in an accident caused by you.

The cost of liability insurance varies depending on factors such as the coverage limits you select. Higher coverage limits will generally result in higher costs. The coverage limits are usually expressed as three numbers, such as 25/50/10, indicating the maximum payout per person for bodily injury ($25,000), the total payout per accident for bodily injury ($50,000), and the maximum payout per accident for property damage ($10,000).

It is important to note that the required limits for liability insurance vary by state, and you should check the specific requirements for your state. While you only need to purchase the minimum coverage, experts recommend buying more than the legal minimum to adequately protect yourself. A more protective level of coverage would be $100,000 per person, $300,000 per incident, and $100,000 for property damage.

In addition to the standard liability coverage, you may also want to consider an umbrella policy. An umbrella policy provides additional coverage for more serious accidents and lawsuits, offering extended protection for both your car and home, along with other benefits. These policies typically increase the per-person coverage limit to $300,000.

Collision insurance

When considering collision insurance, it is important to evaluate your needs and the value you place on your vehicle. If you have a newer, more expensive car, or a leased or financed vehicle, collision insurance can provide valuable protection. On the other hand, if you have an older car that is not worth much, you may want to consider dropping collision coverage to save on premiums. Additionally, if you live in an area with higher rates of collisions or in an urban area with a higher risk of theft or vandalism, collision insurance can be a worthwhile investment.

In summary, collision insurance is a crucial aspect of auto insurance that provides financial protection in the event of a collision. It covers repairs or replacements, regardless of fault, and is particularly important for those with valuable vehicles. By considering factors such as the cost of the car, the deductible, and the likelihood of collisions or theft, individuals can make informed decisions about their auto insurance coverage.

Comprehensive insurance

When deciding whether to opt for comprehensive insurance, consider the value of your car, your financial circumstances, and your personal preferences. If your car has a high cash value or you cannot afford to repair or replace it out of pocket, comprehensive coverage could provide peace of mind. On the other hand, if your vehicle's value is low and you have a higher deductible, comprehensive coverage may not be worth the additional cost.

It's important to note that comprehensive insurance won't cover collisions with objects such as trees or buildings. Additionally, if you're responsible for an accident, you'll need separate coverage, as comprehensive insurance doesn't include liability insurance.

Add-ons and additional covers

Zero Depreciation Cover

This add-on is ideal if you want to avoid the burden of depreciation costs on your vehicle's parts. With this cover, you can receive a higher claim amount as the cost of depreciation won't be deducted during claim settlement. This is especially beneficial for newer cars, as some insurers only offer this add-on for vehicles up to five years old.

Engine Protection Cover

The engine is one of the most crucial and costly components of your car. The engine protection add-on provides coverage for any damage to the engine due to issues like water ingression or oil spill. It also offers financial assistance for engine replacement or repairs. Like zero depreciation cover, this add-on is typically available for cars less than five years old.

Roadside Assistance Cover

Breakdowns can happen anytime, anywhere. With roadside assistance cover, you can get help with a simple call to your insurance company. Services under this add-on often include towing, on-site minor repairs, flat tyre changes, fuel delivery, and even assistance with lost or replacement keys.

Return to Invoice Cover

In the unfortunate event of a total loss, constructive total loss, or theft of your vehicle, the return to invoice add-on ensures you receive the full invoice price as the claim amount. This add-on is particularly useful as your car's value depreciates over time, and you may not receive the full value without this cover.

Tyre Protection Cover

Tyres can be expensive, and repairing or replacing them can put a dent in your wallet. Tyre protection cover reimburses you for any expenses incurred due to tyre damage, such as punctures, bulges, or bursting.

Key Replacement Cover

Losing or damaging your car keys can be a stressful and costly experience. With key replacement cover, you can rest easy knowing that the expenses arising from replacing or repairing your car keys will be covered. This add-on may also include lockset repairs or replacements.

Passenger Cover

While a regular car insurance policy may cover the driver, passenger cover ensures that your passengers are also protected. This add-on provides coverage for any medical expenses incurred by passengers in the event of an accident, including hospitalization, treatment, and ambulance fees. It also offers compensation in the event of passenger disability or death.

Consumable Cover

Consumable items like nuts, bolts, lubricants, engine oil, and brake oil can add up during car repairs. The consumable cover add-on reimburses you for these expenses, ensuring you don't have to bear the burden of these small but necessary costs.

Discounts

Driver-based Discounts

These discounts are based on the driver's characteristics, such as age, profession, or affiliations. Young drivers, for example, may be eligible for a discount if they complete a safe driving course or participate in a telematics program. Students who maintain good grades (usually a B average or higher) can also qualify for a discount. Military personnel, both active and retired, may receive discounts, and certain professions, such as those in education or healthcare, may be eligible for special discounts. Members of partner organizations or employees of associated companies may also qualify for reduced rates.

Driving-based Discounts

Having a clean driving record is a great way to qualify for safe driver discounts. Insurance companies reward drivers who have not been in accidents or received moving violations. Some companies offer additional savings if you participate in a telematics program that tracks your driving habits. Low-mileage discounts are also available for drivers who don't commute daily or drive infrequently. Taking a defensive driving course can also help you save on your insurance premium.

Vehicle-based Discounts

The features of your vehicle can also help you qualify for discounts. Safety features such as anti-lock brakes, airbags, and adaptive cruise control make driving safer and reduce the risk of accidents, so insurance companies may offer discounts for these. Anti-theft devices, such as alarms or tracking systems, can also qualify you for a discount since they help deter car theft.

Loyalty-based Discounts

Insurance companies often reward customer loyalty. If you insure more than one vehicle with the same company, you may be eligible for a multi-car discount. Bundling your auto insurance with other types of insurance, such as homeowners or renters insurance, can also result in significant savings. Some companies also offer continuous policyholder discounts if you've maintained coverage with them for several years.

Other Discounts

In addition to the common discounts mentioned above, there are other opportunities to save. Some insurance companies offer new policyholder discounts to attract new customers. Married drivers may also qualify for lower rates compared to single drivers. Homeowners may be seen as more financially stable and less likely to file claims, so they may receive discounts as well. Finally, billing and payment methods can also impact your premium; paperless billing, automatic billing, and paying your premium in full may result in additional savings.

Frequently asked questions