By Clara Dolors
Before shopping for car insurance you need to understand the different types of insurance options available and the minimum insurance coverage levels required by law in your state. Most of the free car insurance quotes websites provide information regarding state car insurance requirements and you can always check with your state’s department of motor vehicles.
There are three basic types of coverage: comprehensive, liability and collision. Comprehensive insurance provides protection if you are in an accident with an uninsured driver or if your car is damaged by an act of God or vandalism or if your car is stolen. Liability insurance covers the property damage, medical costs, lost wages and pain and suffering others incur if you are at fault in causing an accident. Liability insurance also covers costs of litigation resulting from the accident. Collision insurance covers repair or replacement costs for your vehicle if you are in an accident regardless of fault. The limits of these types of coverage vary. Know your state’s required minimums and make sure you meet those. It is recommended you establish policy limits above the minimum required. Being underinsured can be a financial nightmare in the case of a costly claim resulting from an accident.
Some states require you to include no fault or personal injury protection insurance which covers expenses like medical, lost wages, replacement services, and funeral costs related to an accident regardless of fault.
An optional coverage you may want to add to your policy is rental car coverage. This will pay for a rental if your car is not drivable after an accident. You might want to consider emergency road service coverage to pay for towing if your car breaks down on the road. If you do not have a good health insurance plan to cover your medical expenses, you should consider adding medical coverage to pay your medical expenses resulting from an accident.
One of the most important decisions when purchasing a policy is the level of your insurance deductible. A typical deductible is $500. However, if you are in a financial position to cover a higher share of costs incurred as a result of an accident establishing a higher deductible will lower the insurance company's risk and therefore your insurance premium. Do not set a deductible higher than you can afford. A higher deductible may lower you insurance rates today but when or if an accident occurs, if you don’t have the funds to cover your share of the repair or replacement costs you could end up without a vehicle or driving a damaged vehicle.
If you only ask for the legally required minimum car insurance coverage you will end up with a cheaper car insurance rate. If you select a higher deductible you will also have a cheaper car insurance rate. You need to balance the benefits of a cheaper car insurance rate with the possibility of the financial disaster you could face if you are in an accident and do not have sufficient insurance coverage to cover the associated medical expenses and vehicle repairs.
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