Auto Insurance: Protect You and Your Family While on the Road

Auto insurance is the most common type of insurance policy. Most states require that you be insured with a car insurance policy. As a driver, passenger or family member, you will benefit from knowing how automobile insurance can protect you and your family.

What Do You Need to Know About an Auto Insurance Policy?

One of the main principles of this type of policy is that it covers a specific automobile. This means that you are only insured for those cars listed in your policy.

Auto insurance is really several kinds of coverage combined into one policy; there are six basic types. These include:

• Bodily Injury/Liability: Pays others on your behalf for bodily injury if the injury or damage was your responsibility. It will also cover any legal bills you may incur. Most states require that you carry a minimum amount of bodily injury liability coverage. Additional coverage is recommended if you have a larger net worth.

• Collision: Compensates you for accident-related damage to your car. Also, most policies insure you when you are authorized to drive someone else’s vehicle.

• Comprehensive: Pays for damage to your car that is not accident related, such as theft, vandalism, fire, storm damage, etc. Together with collision coverage, the cost of coverage for these can range from one third to one half of your total premium.

• Property Damage: Pays for accident-related damage to someone else's car or property. This coverage is usually cheaper than bodily injury coverage.

• Medical Payments: Reimburses you and any of your passengers for medical expenses related to a car accident, regardless of who is at fault. It also provides coverage to an insured member if hurt as a pedestrian by a car or as a passenger in someone else's vehicle.

• Uninsured Motorist: Pays you if the at-fault party in an accident was uninsured or underinsured. It also pays if you are injured by a hit-and-run driver. You can collect for medical bills, lost wages, and pain and suffering. This coverage is inexpensive because the probability of hitting an uninsured driver is low.

Do You Need Medical Coverage if You Already Have Health Insurance?

Even if you already have health insurance with your employer, you may want to include medical coverage in your automobile insurance policy. While your employer’s health insurance will cover certain medical expenses, medical coverage will provide you with the additional protection you may need.

For instance, if you are in a car accident, medical coverage can help cover the costs for a poorly insured passenger. Unlike health insurance, medical pay also covers funeral expenses.

For a small premium, you can get the additional protection that you need.

How Can You Save Money on Your Auto Insurance Policy?

The auto insurance industry is very competitive. In turn, you will find that policy premiums vary considerably among providers. The following tips can help you save money on your automobile insurance policy.

Shop for Competitive Quotes: When looking to purchase any type of insurance policy, a good place to start is to shop around for competitive quotes. Make sure that you evaluate the adequate coverage that you need for your policy.

Ask for Discounts: You may qualify for discounts offered by your insurance company. Be sure to ask your insurance agent about the types of discounts available. Discounts can save you as much as 25% to 30% on your premiums.

Typical Discounts Offered:

•  Multi-Car and Multi-Policy: You can have your insurance company assign family members to specific cars. It is a good idea to assign your highest-risk family member to the least-expensive car.

•  Anti-Theft Devices: This discount only applies to comprehensive coverage. Because not all car security systems and alarms are the same; check with your insurer before installing one.

•  Safety Features: Some insurance policies provide small discounts for safety features such as air bags and anti-lock brakes.

•  Carpooling: Most leading insurers offer a 15% to 20% discount to commuters who carpool to work daily. You can also save by using public transportation.

•  Good Driver: These discounts range from 10% to 20% of the total premium. You may also get a discount if you or a family member completes a defensive driving course.

• Nonsmoker: If you or an insured family member is a nonsmoker, your insurance premium can be reduced; this also applies to your homeowners and life insurance premiums.

•  Good Student: If your teenager drives and maintains a certain grade-point average, you may be eligible to receive a discount of 5% to 25%.

Check on Your Car's Rating: Insurers charge higher premiums for cars with high claim rates. Before you buy your next car, you should check out premiums charged to specific cars. Models that score well for safety and durability are charged less for collision and comprehensive coverage.

Consolidate Policies:You may be able to reduce your insurance premiums by consolidating insurance policies under one provider.

Watch Your Deductibles: Whenever you see the word "deductible," it is an opportunity to save money. You can reduce your premiums by increasing the deductible amounts on your policy. By adjusting your deductibles you can save about 15% per year. Just make sure that you can afford the higher deductible if you are in an accident or need to file a claim.