You have shopped, bargained and groveled to find a good car at a good price. But before you can zoom off the lot in your new wheels, there's one more tiny detail: insurance. Comprehensive or collision? Low or high deductible? And where can you find the best deals? It is enough to take the shine off your brand wheels, but don't let it. Buying car insurance just means mastering a few basics.
Every car insurance policy has a deductible, which is the amount you must pay toward any damage to your car before your insurance company will begin picking up the tab. Policies also have a limit, which is
the maximum amount your insurance company will pay in the event of an accident.
Insurance policies are classified according to how much your insurance company will pay per person and per accident. So if your policy has a $100,000/$300,000 limit, your insurance company will pay up to $100,000 to each person involved in the accident, with a $300,000 maximum for the entire accident. You can lower the cost of your policy by choosing a high deductible -- but then you'll have to pay more if you do have an accident.
The trick, then, is getting the lowest deductible and the highest coverage limits you can afford.
Most states require property damage liability, bodily injury liability and medical payment insurance. If an accident is your fault, property damage insurance covers damage to another car, and bodily injury liability covers injuries to passengers in your car and other cars involved.
Medical payment insurance covers you and your passengers, regardless of whether the accident was your fault. If your state requires it, find the highest coverage limits you can afford. If your state doesn't require it, don't just brush it off. Remember that if an accident is your fault and you're not fully insured, you may be stuck with a whopping bill.
Whoever financed your car loan will probably require you to get comprehensive and collision insurance; comprehensive covers you when your car is broken into or vandalized, and collision covers you -- really the car itself -- when you are in an accident.
Because insurance rates vary from company to company, it is worth shopping around before you buy. Keep these tips in mind:
- You can lower the cost of a policy if you insure more than one car, or if you have a renter's or homeowner's policy with the same company.
- Consider adding coverage to your policy to protect you if you're in an accident with an uninsured motorist.
- Reduce your rates by parking your car in a locked lot, or buying a car with such safety features as air bags and antilock brakes.
- Drive carefully; drivers with clean records can get lower rates.
- If you drive a limited number of miles, ask your company to lower your rates.