Understanding your insurance needs is no accident
By Frank Wagner
Copley News Service
As sticker prices go up every year, maintenance seems to increase every month and gas edges up every day, insurance may be the only area where you can save money while operating a motor vehicle. In fact, the National Association of Insurance Commissioners estimates that the average cost of automobile insurance declined by 1.3 percent in 2005.
But, how much insurance is enough - and when do you have too much?
There's no one-size-fits-all answer, but with some self-assessment and research into insurers, you will find the solution that works for you. Remember that a number of variables affect how much you pay for insurance, including your age, sex, driving record, location of residence, annual driving mileage, the car you drive and even your credit score.
There are six benefit types to consider:
- Bodily injury liability (for injuries to another motorist or passenger).
- Property damage liability (for attorney fees, court and other costs when others' goods are damaged).
- Medical payments (for injuries to you or others; this may cover you if you are a passenger in another vehicle or are a pedestrian injured by a vehicle).
- Collision (to repair your vehicle after an accident).
- Comprehensive (may cover vehicle damage from vandalism or natural causes in addition to accidents).
- Uninsured/underinsured motorist (for when the other guy is at fault and lacks insurance).
On his Web site, Seattle attorney Christopher M. Davis asserts, "Dollar for dollar, UM or UIM coverage is extremely important. In my practice, I see that most accidents are caused by the most irresponsible citizens of our state." He concludes, "My advice to everyone is this: purchase as much UM/UIM coverage that you can afford."
If you're driving an old car, rent an apartment and own little in the way of worldly goods, then a bare-bones liability policy may be the ticket for you. But when you have a new car, a house and other assets, you stand to lose if you are at fault in an accident and are underinsured.
The rule of thumb is to get a policy with coverage limits of at least $100,000 per person injured and $300,000 per accident.
In fact, if you have a new vehicle, you may want to consider a feature called gap insurance, which pays the difference between the actual cash value of the vehicle and the outstanding balance on your loan or lease. Since a car loses nearly one-third of its appraised value within 90 days of purchase, this could make a big difference if you have a large outstanding balance on a car loan.
To avoid paying for services you've already bought, survey the resources you have now:
- Will your health insurance cover emergency situations? Reduce medical benefits in your auto policy to lower the premium.
- Does your auto club membership include towing? If so, you may be able to eliminate coverage for a service you won't need. (In fact, the auto club may offer affordable insurance).
- If your car is under warranty, you probably don't need coverage for a mechanical breakdown.
- To further reduce premiums, adjust benefit levels. By increasing the deductible - that initial out-of-pocket motorists pay before insurance kicks in - you should be able to reduce your rates.
- Students with good grades and owners of multiple cars often can command discounts.
- Many insurance companies offer discounts on vehicles that rack up low annual mileage.
- And be sure to ask, "Does your company have any other discounts I might be eligible for?"
Before you start shopping, InsuranceAuto.org suggests that you create a work sheet to help you compare insurers. Down one side, list the benefits you require: bodily injury liability, property damage, liability, etc. Across the top, list the carriers you solicit bids from; three should give you a good sampling without creating excessive volume of phone calls and e-mails.
To get an accurate price, be prepared with information regarding your driving record (including tickets and accidents) and some ideas as to the distances and types of driving you do.
Remember, the same policy can differ by hundreds of dollars from company to company, so if you do your homework, you should be able to corner the coverage - and the rates - that are right for you.
WHAT INSURANCE COMPANIES PLACE A PREMIUM ON
10 MOST EXPENSIVE TO INSURE
1. Lexus IS 300
2. Land Rover Discovery Series II
3. Audi S4
4. Jaguar X-Type
5. Mercedes SLK Class
6. Lexus GS 430
7. Land Rover Freelander
8. Mitsubishi Montero
9. BMW X5
10. Toyota 4Runner
10 LEAST EXPENSIVE TO INSURE
1. Oldsmobile Silhouette
2. Pontiac Montana
3. Saturn L Series Sedan
4. Chrysler PT Cruiser
5. Saturn L Series Wagon
6. Chevrolet Venture
7. Chevrolet Astro
8. Saturn Vue
9. Jeep Wrangler
10. Oldsmobile Bravada
- Source: www.insweb.com? Copley News Service
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