Hunt for Cheaper Car Insurance - Part 2 - Coverages
Probably more important than the company you choose for your auto insurance is the actual coverage. It’s probably a good idea to go over the major types of coverage before going forward.
Liability
This covers an accident where you are at fault. This is normally the bare minimum that you can get by with. If you run into someone or over a telephone pole this is what will pay the bill. Many times it is split into bodily and physical damages and sometimes with a maximum per person and per accident.
How much you need is really related to how much assets you have. If you don’t have enough coverage to pay the bill then chances are you will get sued. Needless to say, more assets mean more coverage is needed.
Collision
This covers the cost of your car if you are at fault. This comes with a deductible that you have to pay first before the insurance covers the rest. The higher the deductible, the lower collision costs and vice versa. Personally, I would go with the highest you can afford. If you have a car that is paid for and is aged then you can probably drop this. However, if you are in an accident that is your fault then you are out of luck on any damages to your vehicle.
Comprehension
Similar to collision except that it covers natural disasters, vandalism, or theft. Again I prefer the highest deductible I can afford.
Uninsured/Underinsured
This covers both a hit and run or a situation where the other guy doesn’t have insurance or doesn’t have enough to cover your medical bills. If you skimp on this and you are hit by someone in either of those previously mentioned categories you will be paying your own bills.
Personal Injury Protection
I had to look this one up. It covers medical and funeral costs, no matter who is at fault. Many times this is covered by other life or health insurance policies.
Rental Coverage
If it’s your fault then you will get reimbursed some for the cost of a rental car while yours is fixed. If it’s their fault this isn’t needed.
Towing and Labor
If your car needs to be towed or sometimes other services such as getting locked out of your car, running out of gas, etc. If you think you will need some of these services often it might be beneficial to also check out an auto club membership.
I think that about covers the main types of coverage. Considering I am a poor college student with a ten year old car I think I am going to ignore collision and comprehension. I don’t have many assets so I will go with low liability. When this situation changes I plan on increasing it significantly.
As far as the others, well PIP doesn’t seem worth it to me. I think I will save more long term on rental and towing coverage by just saving the money I would have spent on them. The towing/labor category was one I debated a lot because I have locked my keys out of my car more than once. However, it will probably be cheaper to just get a second key if I don’t think I’ve learned my lesson there.