What coverage should you look for in an insurance policy?

Buying car insurance isn’t exactly what most of us would call fun. It can be confusing with so many insurance companies, policies, and coverage options to choose from, but it’s so important to have a reliable policy in case of an accident.

So, how do we simplify the process of finding the right car insurance? Let’s break it down.

Gather vehicle info

Insurance providers will ask for certain details about you and your vehicle in order to give you some coverage options.

Start with listing the names, birth dates, and driver’s license information of everyone that you will be insuring. Include the year, make, and model of your car(s). It also helps if you have the vehicle identification number (VIN), current mileage on the car, and an estimate of your mileage per year.

Having all this information prepared before you request quotes can speed up the process. It will also ensure that each insurance provider receives the same information so you’re confident when comparing quotes.

Understand the types of coverage

Car insurance typically comes with the following coverage options:

• Liability Coverage: This is typically required by law and covers the cost of property damage and injuries to others if you are at fault in an accident. You’ll often see this coverage expressed as a series of numbers like this: 100/300/100. The first number stands for the bodily injury per person limit ($100,000 per person in this example). The second number represents the bodily injury per accident limit ($300,000). And the third number is the property damage per accident limit ($100,000).
• Collision Coverage: This covers the cost of repairing or replacing your vehicle in case of an accident.
• Comprehensive Coverage: This covers damage to your car from non-collision incidents, such as theft, vandalism, or natural disasters.
• Uninsured/Underinsured Motorist Coverage: This helps when the at-fault driver doesn't have insurance or enough coverage to pay for your damages.
• Personal Injury Protection (PIP): This covers medical expenses and other related costs for you and your passengers, regardless of fault.

A policy will usually have a combination of these. For most, it’s a good idea to have at least liability, collision, and comprehensive coverage.

Consider your deductible

The deductible is the amount you pay out of pocket before your insurance kicks in. Choosing a higher deductible will lower your premium (what you pay for the insurance - usually monthly), but you'll have to pay more in the event of an accident. Conversely, a lower deductible will increase your premium but reduce your immediate expenses after an accident.

For example, you may decide on a $1,000 deductible because it lowers your monthly insurance premium. Just be aware that if you are in an accident, you will have to pay the first $1,000 before the insurance starts paying. This is why it’s always good to have an emergency fund of $1,000 put aside.

If you choose a $500 deductible, you’ll most likely pay a higher premium each month, but you’ll only be on the hook for the first $500 if you are in an accident.

Evaluate the options based on the cost of the policy and the deductible to decide which policy is right for you.

Check for discounts

Many insurance providers offer discounts that can significantly reduce your premium. Common discounts include:

• Multi-Policy Discount: If you bundle your car insurance with another policy, such as home insurance, you may receive a discount.
• Safe Driver Discount: A clean driving record often results in lower premiums.
• Good Student Discount: If you or your child is a good student, you might qualify for a discount.
• Anti-Theft Device Discount: Installing anti-theft devices in your car can lead to reduced premiums.
• Low Mileage Discount: If you don't drive your car frequently, you may qualify for this discount.

Shop around

Don't settle for the first insurance company that comes your way. Similar to shopping around for the best deal on your car, it’s beneficial to compare quotes from multiple insurance providers. Consider both national and local companies, as each may offer unique advantages. You can request quotes online or contact an insurance agent to help you through the process.

Just remember that agents are usually paid a commission on the policy they sell which means they may push for pricier coverage.