Wednesday, December 14, 2011

Auto Insurance: Save Money by Getting Only the Coverage You Need

Guest Post: Auto Insurance: Save Money by Getting Only the Coverage You Need
By Jessica Bosari
Since personal circumstances are constantly changing, I always reassess my needs and financial situation before buying car insurance.   First, I compare car insurance quotes every six months. Second, I save a substantial amount of money by not over insuring my vehicle or purchasing types of insurance that I’ll  probably never use.
Auto Insurance Mandated by Law
Most states have laws that require people to buy specific types of auto insurance.  In the state I live in Liability, Uninsured, and Underinsured Insurance are required, so I already know I’m going to buy them.  The minimum requirements are usually not enough since injuries and damage to cars can cost so much.  I try to buy enough that I’m not left destitute if the worst-case scenario happens.
Lending Institution Requirements
If you’re like me, you pay cash for a car, so you won't have to buy whatever the lending institution requires.  Most are going to insist on liability plus collision and comprehensive insurance.  Until the loan’s paid off lenders are going to make sure their collateral’s covered.  Lender required insurance is non-negotiable, so I avoid car loans altogether.
Choosing a Deductible
Since I have enough saved to cover the cost of buying a replacement car, I save hundreds on collision and comprehensive insurance every year.  But not everyone has such a healthy emergency fund. If not for that space cash, I would figure up how much I can pay out of pocket and try to save enough money to cover a higher deductible, because it decreases the amount of my insurance premium.
Extra Insurance Riders
Once again, I go back to my personal circumstances to determine whether to buy any of the additional insurance riders that companies offer.  I won’t buy any extra type of insurance just because an agent recommends it.  If I’m pretty sure it’s something that I’ll use and I can see that the benefits outweigh the cost, then I’ll consider it.
Emergency Road Service
Each insurance company’s different, but most pay someone to fix your car on site if it strands you on the side of the road.  If it can’t be fixed on site, it pays a tow service to take the car to the nearest dealer or garage. This only makes sense when it's cheaper than other roadside assistance programs like AAA, and it usually isn't. Also, if you have to make a tow claim, it could affect your car insurance rates. No thanks!
Car Rental
I don’t usually add rental to my policy because I can always hitch a ride or borrow a vehicle.  If I didn’t have any other transportation options while mine was out of commission I still wouldn't add it to my policy.   It's usually cheaper to rent for a few days than buy the coverage.
Yes, I'm frugal, but I also know another importance of carrying adequate insurance, having worked in the car insurance industry for 13 years. Read more of my car insurance tips at CarInsuranceQuotesComparison.Com.


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Elnora Cowger said...

Your last two tips are spot on. I removed towing and car rental from my policy because I want to be practical. For the former, I believe that when I keep my car in good shape, I won’t have to worry about towing and roadside assistance. For the latter, I’ve done my research and found out that economy cars cost $20 - $25 a day if you rent them. I rent a car once or twice a year, so it’s illogical to pay extra to include it in my coverage if I’m not going to use it. In these trying times, it really pays to be frugal.

Elnora Cowger

Keith Andrew said...

If you need an emergency assistance on the road, you should contact roadside service rather than your insurance company. For me, if I know than I can afford a simple service like that, I wouldn’t involve my insurance company right away. It’s because it may affect my insurance rate afterwards. I’ll just rely on my insurance if something serious happens and it concerns huge sums of money.

Keith Andrew

Hershel Duffey said...

This post is a must-read, and it is certainly advisable for car owners who excessively get different car insurance policies. I agree that there’s a need to personalize the insurance that you have to get, so that it wouldn’t be a waste of money. However, you should determine which insurance policies you really NEED and can do without. It will also help to know each policy’s coverage so you can avoid getting policies that have overlapping benefits.

-- Hershel Duffey