Insuring your car isn't just a great idea--it's a legal requirement
in many states. Even if you drive your car just a few miles
a month, you should insure it to protect yourself and those
Types of Coverage
There are four main types of car insurance, though insurance
policies don't necessarily offer each kind of coverage. The
four types of coverage are:
- Liability. Applies to property damage or injuries
that you cause to other people while driving. This coverage
- Medical. Applies to medical treatment for you and
your passengers if you are in an accident. This coverage
may include disability insurance and compensation for pain
- Collision/comprehensive. Applies to the damage
to your car in an accident that you cause up to the book
value of your car. Comprehensive applies to other kinds
of damage or loss from theft, vandalism, natural disasters,
- Uninsured/under-insured drivers. Applies to your
costs if an uninsured or under-insured driver (i.e., who
can't pay) injures you or your passengers.
Other insurance extras that are either included in your policy
or cost extra are towing and car rental.
Factors That Determine the Cost of Insurance
- Location (insurance rates are usually higher in urban
- Driving record
- Kind of car
- Theft rate
- Size of deductible
- Type and level of coverage
Ways to Lower Your Insurance Costs
- Raise your deductible. Increasing your deductible
from $250 to $500 or even $1000 could reduce your comprehensive/collision
cost by 15-40%.
- Discontinue collision and or/comprehensive coverage
on older cars. If your car is worth less than $4,000,
it may not make sense to pay for collision/comprehensive
- Insure through a single insurance company. Insuring
all of your vehicles and your house through the same company
should qualify you for a multi-policy discount.
- Reduce coverage extras. It does not make sense
to pay extra for towing coverage if you belong to a club
(like AAA) that provides free towing.
- Ask for discounts. You may be eligible for discounts
if your car has ABS, airbags, an anti-theft system, or if
you drive few miles, are a senior citizen, have an AAA membership,
or are a student and have good grades.
Finding Affordable Insurance
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