Putting Together a Car Insurance Policy
Tags: Car Insurance, Insurance, Cars

Getting auto insurance takes some research to ensure the best value for money.

Between the multiple coverage types available and the fine print that can introduce conditions you’re not comfortable with, it can be a slippery slope leading to a costly, inefficient policy.

While you can’t pick and choose elements you like and leave others aside 100%, there are ways to personalize your coverage and make it work for you.

Let’s check out the common types available to average citizens and some smart ways to extend your policy while saving up a bit.

Coverage Types

The essential aspect to understand is the difference between various coverage types that insurance contains. That way, you can protect yourself from getting tricked by an agent offering something that sounds reasonable, but you don’t need it in reality.

Liability Coverage

This one is a must in most states, ensuring that you can afford to pay damages if you cause an accident. The amount you have to purchase differs from one area to the next, so check the minimums for your place of residence.

Either way, liability coverage has two components:

Bodily injury — to pay the cost of the injured party’s treatment.

Property damage — to cover the cost of the injured party’s vehicle.

Even if you’re the best driver in the world, confident you’ll never have an accident, you can’t avoid this part.

Uninsured Motorist Coverage

If you’re in an accident caused by an uninsured driver and get hurt, this coverage helps you pay for medical expenses and repair your car. It also applies to situations with underinsured drivers, whose policies can’t cover your full bill.

This insurance type is mandatory in some states. If your area deems it optional, consider whether your savings can cover these expenses to determine whether you need it.

Collision Coverage

If your car collides with anything that damages it, this coverage type helps you repair or replace it. As long as you own, not rent, the vehicle, it’s entirely optional.

Comprehensive Coverage

As the name suggests, this is a broad insurance subtype. It covers the expenses caused by vandalism, hail, theft, or even fire, helping you repair or replace the vehicle.

This one is optional, and you can choose which situations you want to insure yourself against, customizing the policy to match your conditions.

Personal Injury Protection

Finally, this type is available only in some states. It helps you cover medical expenses if you have an accident, but also other costs incurred as a result of your injuries. So, for example, if you can’t work for a month, this insurance policy helps you bridge the financial gap.

Multi-Car Policies

Once you understand all the ways your policy can protect you and determine which of these you require, there’s another potentially useful thing to consider. Instead of getting a separate premium for each car you own, you can get a multi-car policy for all vehicles under the same address.

Apart from the convenience, these are typically cheaper, even including discounts for each new vehicle you insure. However, as Forbes explains, companies could cap the deals at 25% maximum, preventing you from taking too much advantage of the system.

Can I Mix and Match?

You might not need the same comprehensive coverage on your everyday car and the one you use for vacations.

However, most companies require the same amount of uninsured motorist coverage and liability insurance on each vehicle. Luckily, though, comprehensive and collision sums are more flexible.

Multi-Person Policies

Savings on car insurance are generally the easiest to achieve if you compare quotes from different companies. Most of them offer multi-car coverage, but there’s another avenue you could go down to boost budget-friendliness with the right company — multi-person insurance.

When you purchase a plan, it tends to get tied to your name. However, what happens when your teen starts driving? You don’t have to buy a full premium for them, too — you could even get a discount.

When it comes to lending cars to other people, you can’t add them to your premium unless it’s a part of your immediate family.

Still, bundling discounts is quite possible, and if you’re a part of a multi-driver, multi-vehicle household, this can make a lot of difference in your financial situation overall.

The Bottom Line

Having a reliable insurance coverage that covers all potential issues you might find yourself in is vital for responsible car ownership. It protects you from financial problems, reduces the stress after an accident, and makes you feel generally safer.

However, it’s not always necessary to purchase everything your agent offers. Be smart about it and focus more money on elements that seem the most relevant. That way, you’ll get the best protection without breaking the bank.