Car InsuranceCar Insurance Coverage Needs and Descriptions Liability for bodily injury pays if you hurt someone in your car, in their car or a pedestrian in an accident that is your fault. You need for this coverage to cover your net worth. Liability for property damage pays for damages to the property of others caused by an accident that is your fault. Medical payment coverage covers medical and funeral bills for anyone injured in your car regardless of fault. This is a secondary insurance and you should only carry enough to cover your deductible. Personal injury protection covers your medical bills and lost wages not covered in the liability for bodily injury section when the accident is your fault. This is usually a back-up for your health insurance but laws vary from state to state. Collision coverage covers the damage to your car in an accident caused by you. The price is determined by the amount of the deductible. It is not advisable to insure a vehicle that has a value of under $2,000. Comprehensive coverage pays for damage caused by random acts. It also has a deductible. Windshield coverage pays for the replacement of a damaged windshield and is usually quite cheap. Some policies cover windshield replacement in the comprehensive coverage. Towing and service reimbursement of course pays for emergency towing. You can cover yourself for these expenses by having a fully funded emergency fund. Rental car re-imbursement. Here again you can self insure yourself with your emergency fund. Uninsured and underinsured motorist coverage is not required in all states. It covers your injuries when it’s the other drivers fault and he is not insured or under insured. Your health insurance may cover this but you definitely need it if it does not or you do not have health insurance. Umbrella insurance is a large liability policy that covers liability judgments that exceed the limits of your auto and homeowner’s policies. You need this if you are rich – in excess of $700,000 in assets. Usually it is quite cheap at approximately 1 million of coverage for $200 per year. This will also guard against libel, slander, false arrest, invasion of privacy and similar charges. Make sure that you are covered. Even though most if not all states require car insurance it is not uncommon for people to operate vehicles without having insurance. Tips to Reduce Car Insurance Costs Drive defensively – You can’t control what other drivers do on the road but you have the control over your vehicle. Do not take chances. Compare prices – Check the rates of other insurance providers every few years to see if you can get your insurance a little cheaper. Drive a cheaper car – The cost of insurance for a Saab is much more expensive than for a Chevette. Get a discount – Car insurance companies often give discounts for things such as driver’s education, safety mechanisms on your car and safe driving records. Pay the premium annually – Paying premiums annually instead of monthly or quarterly is usually cheaper. Avoid traffic violations – This is a no brainer. Go to reform school – When you fail to avoid the traffic violations do what it takes to clear your record. Raise the deductibles – Different states and insurance companies have different policies regarding deductibles but higher deductibles will decrease your insurance costs. Move – Car insurance costs vary depending on the state that you live in. This is not so much a recommendation, rather a heads up on why insurance costs can vary just by crossing state lines.
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