Auto Insurance Decisons

If you have a loan and owe money on your vehicle you generally are required to carry full coverage insurance. If you do not have a loan on your vehicle you must make the decision of which type and how much insurance you should carry.

Full coverage insurance covers your loss, less your deductible if you are in an accident no matter who is at fault.  The decision you must make with full coverage is how much of a deductible you should carry. This is really a personal preference issue. The cost of the insurance is less with a higher deductible. The best thing to do is to decide how much you could write a check for if you needed to. Once you know about what your comfort zone is then you can request a quote for the different deductibles and make an intelligent decision from there. I personally have always carried a 1,000 dollar deductible. I have found that in my case my rate is nearly half of that for a 500 dollar deductible policy, and I factor in that my car is not new model, so in my situation it has always been best to go with that. Your company may be different. Age and geographical location do play a role in the insurance premium rates. There may be some instances that this policy will not pay out, I believe that if you were driving for a work related task or if an unlicensed driver is driving the vehicle it won't cover it. It is always best to get policy specific information before obtaining the insurance.

Liability insurance pays only other people that have suffered a loss because of your vehicle. Deciding to drop down to liability can be a sound decision. If your vehicle is older and you are generally a safe driver it may be cost effective to have only liability. I have heard that if the value of your vehicle is less than 10x your premium it may be a better choice. That sounds simple enough but you also need to factor in your comfort and financial stability into the equation. If you couldn't replace your car if you needed to it may be better for you to keep the full coverage just a little longer. Personally I have had liability exclusively for 10 years. I am more comfortable with a little more risk and a low premium. This insurance will not pay if you are involved in an accident that isn't your fault. Liability insurance is regulated by the state. Each state has their own statutes as to what the lowest limits of insurance needs to be. Most agents will recommend that you have more than the bare minimum needed. Review each category and decide what you are comfortable with.

This is not meant to be guidance, please check with your agent for company and state specific information. Another thing to keep in mind is to compare premium rates often. I have found that sometimes even though I thoroughly checked rates before buying a couple years later there was a much lower rate with another company.