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WHAT TO KNOW BEFORE BUYING CAR INSURANCE

UNDERSTAND THE COVERAGE AVAILABLE

Without sufficient research you risk getting the wrong coverage. Paying for a plan you don’t need can cost you big money in the long run. The first step is to know what types of coverage are available.

LIABILITY

Liability coverage is one of the most basic types of auto insurance and is required by law in most US states and Canadian provinces. It covers damage your car causes to other people or their property.

COLLISION

Collision insurance covers repairs to your car if it hits another vehicle or fixed object. It can pay up to the car’s current value, minus your deductible. If you have an older automobile with a low resale value, it may not be worth paying for collision coverage.

COMPREHENSIVE

Comprehensive insurance covers damage to your vehicle by things like hail, floods, fire, vandalism, or theft. If your car is stolen or is declared a total loss, you can receive up to the current cash value of your vehicle, minus your deductible. This type of coverage also isn’t worth it if your car has a low cash value.

UNINSURED AND UNDERINSURED MOTORIST

Uninsured and underinsured motorist coverage protects you in case of an accident with someone who does not have insurance or whose coverage is insufficient to pay the damage owed to you. In some places, this type of coverage is required by law, while in others, is it optional.

MEDICAL PAYMENTS

Medical payments coverage can help pay for medical expenses incurred as a result of an accident. This insurance protects you, your passengers, or family members who are driving the vehicle.

This type of policy may pay for medical expenses, such as hospital visits, x-rays, and surgery. It’s mandatory in some locations and optional in others.

PERSONAL INJURY

Personal injury protection (also known as PIP) is not available in all states and provinces. In some places where it exists, it’s also mandatory.

Personal injury insurance is similar to medical payments coverage in that it helps with costs related to injuries incurred by accidents. It can also help cover additional expenses such as lost income or child care fees.

KNOW THE LAWS WHERE YOU LIVE

In the United States, laws regarding auto coverage vary greatly from one state to another. You’ll need to research the minimum insurance requirements for your location.

GET AS MANY QUOTES AS POSSIBLE

Once you know what you’re looking for, compare prices at as many insurance providers as possible. Be sure to check both the large companies and smaller regional brokers. This will help you choose the best prices and customer service.

ASK QUESTIONS

You’ll want to get as much information as possible about:

  • Whether the broker is giving you the insurer’s lowest price
  • How future accidents or tickets might affect the price of your policy
  • Any discounts the company offers, for example:
    • Good driver discount
    • Online documents discount
    • Discounts for anti-theft devices in your vehicle

THE BOTTOM LINE

Understanding the coverage available and what’s mandatory in your state will give you a good start toward getting the right insurance for you.

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