Whether you are a new driver or just purchased a new car, buying automobile insurance is your next step. Not only is it required by law, but it can also help save you from serious financial hardship in the event of an accident.
The National Safety Council reports that 4.5 million people were seriously injured in accidents across the U.S. in 2018. A study by the National Highway Safety Administration estimates the economic cost of motor vehicle accidents cost the U.S. is $242 billion dollars.
Being in even a minor fender bender with no injuries is stressful. But no matter what type of accident you’re in, you’ll be glad you have insurance to help you out financially.
Below are the factors to consider when choosing how to buy car insurance.
What is Your State’s Minimum Insurance Requirements?
Each state mandates the minimum insurance requirements every car registered in their state must carry on their vehicle. For instance, in North Carolina, vehicles must have liability insurance which consists of both bodily injury and property damage insurance. They must also carry coverage for uninsured motorist bodily injury and uninsured/underinsured motorist property damage.
So, in North Carolina, the minimum insurance requirements must cover $30,000 bodily injury for one person, $60,000 bodily injury for two or more people, and $25,000 property damage in order to legally drive on the road.
While buying auto insurance coverage that meets the minimum insurance requirements comply with your state’s laws, there are many instances where you may want more insurance. And there are many factors that will change how much you pay for your insurance.
What is Bodily Injury Coverage?
In simple terms, bodily injury coverage is the maximum the insurance company will pay under the policy when someone is injured by your vehicle.
In our example using North Carolina’s minimum insurance requirement, this would be $30,000 max if only one person was injured. If two or more people are injured, the insurance will cover $60,000 max collectively.
What is Property Damage Coverage?
Property damage coverage is how much the insurance policy will cover to pay for damages to other people’s property when it is damaged by your car. The property can be cars, motorcycles, fences and more.
What is Uninsured/Underinsured Motorist Coverage?
Sometimes people are involved in auto accidents with other people who are not insured at all or do not have enough insurance to pay for your injuries and property damage. This is when having uninsured or underinsured motorist coverage is helpful. It will help you pay for medical and property expenses that exceed the other person’s insurance limits.
What is Collision Coverage?
Collision coverage is add-on insurance that you can buy to insure your car up to its Blue Book Value. This insurance will allow you to buy another car when yours gets totaled. It is based on your car’s estimated price at the time of the accident though, rather than the price you paid for your car.
What is Comprehensive Coverage?
Comprehensive coverage is another add-in insurance you can choose when purchasing car insurance. This coverage can vary by policy but generally, it covers your car for theft (of your whole car or items in it), vandalism inflicted on your car, and if your car suffers damage from fire.
What Are Deductibles?
A deductible is the amount of money you will have to pay before your insurance company will pay for property damage coverage. Depending on what works better with your budget and your risk tolerance, if you choose a higher deductible, it can lower your monthly insurance payments. Ask your insurance agent to explain the different price breaks to help you decide what works best for you.
Ask What Discounts Are Available
Most insurance carriers have discounts that are available. So ask your auto insurance agent which ones they offer. Below are some of the more common discounts offered.
If you have been accident-free for three to five years, you may qualify for a discount.
If you only drive your car a limited amount of time per year, you may qualify for a low mileage discount. Under 7,500 miles per year is common.
Defensive driver discounts may be available if you qualify by taking defensive driving lessons from a certified school. Safe driver discounts may be available to you. Some insurance carriers require you to allow them to monitor your driving in order to qualify.
There are likely many other discounts available depending on the insurance carrier you choose to purchase your policy from. For example, if you’re in the military or work for the government, some insurers provide discounts. You may also qualify for discounts if you are in college living away from home, are a senior, or if you bundle your car insurance with your homeowner’s insurance.
Talk to your insurance agent. They will ask you a variety of questions about you and your driving record to help point you toward possible discounts available to you.
Check the Status of Your Insurance Carrier
An insurance carrier needs to be licensed to sell insurance in your state. So before you purchase an insurance policy, check the status of the insurance company. You can do so by contacting your state’s insurance department.
Read Your Policy
To ensure you know your rights and what your insurance policy covers, read the insurance policy you receive from your insurance company. It will outline what you need to do if various situations happen during the policy period, such as what to do if you have a claim, or whether or not you are covered for a rental car when your car is in the shop.
Now You Know How to Buy Car Insurance
There is a lot of options to consider in how to buy car insurance. You can choose to insure for the minimum required by your state or get more fully insured to protect you further.
Talk to your auto insurance agent to find out all your options, including discounts and payment options.
Contact us to get an auto insurance quote or to ask questions. We are here to help.