You already know that in many places the law requires you to carry at least basic car insurance, but why should you spend money on all the extra car insurance coverage you can buy?
The reason is really quite simple. A good car insurance policy should protect you from financial loss and cover as much risk as possible. So the more types of coverage you buy with your car insurance the more protected you should be. Sounds pretty simple right? Well yes and no. You need to understand the coverage you have purchased to make certain it covers what you think it covers.
The easiest way to make sure you have the coverage you need is to do these three simple insurance tests. If your policy passes all of them then you know you’ve got the right coverage.
Don’t duplicate insurance coverage. In other words try to insure for the same risk as few times as possible. Overlapping coverage is inefficient and costs you money. The way the car insurance industry works it is sometimes difficult not to duplicate coverage but in many cases you can eliminate the duplicate coverage.
Now you might be thinking well that’s pretty straight forward. But really it’s quite easy to find that you’ve done exactly what you shouldn’t have.
This rule tends to get broken most often because we tend to insure for the same event under different policies. For example you purchase additional medical coverage to protect you in the event of an accident but at the same time you carry a full health plan insurance that covers emergency treatment. This is the same event and you are paying for it twice. Of course dropping your auto coverage only works if this is a commuter car that only you use. Otherwise you’ll need the additional coverage for passengers.
But double coverage also occurs will collision and comprehensive coverage. People buy uninsured and underinsured motorist property damage insurance but really you don’t need to because your collision will cover damages done to your car by the uninsured driver and if your worried about an uninsured driver hitting your house, well that’s what your home insurance policy is for.
These are just examples but what it really comes down to is you need to pay very close attention to what you are buying for coverage. It’s important to have adequate coverage but duplication costs you money and benefits no one but the insurance company.
Buy car insurance that offers the broadest coverage. So for example if you are buying insurance that covers your car if it should become wrecked search for coverage that covers your wrecked car no matter what, rather than buying one coverage for an auto accident, one coverage for fire, and one coverage for theft. Again you may not be able to combine everything under one coverage but you should be able to do some grouping such as fire and theft being under the same coverage.
It’s often hard to tell when you are breaking this rule. An example would be you purchase additional medical insurance with your car insurance that covers the driver but it covers only injury related to an automobile accident. Mean while your medical insurance covers accidental injury which would be an auto accident. You would be better off putting that money towards a better medical insurance that covers higher amounts or has a lower deductable.
For each portion of coverage you purchase keep the dollar value consistent for example if you value your car at $5000.00 on your accident coverage, you shouldn’t value your car insurance at $8000.00 on theft. Most car insurance companies won’t allow it, and if you find one that does and an accident occurs you are only going to get the lowest value you stated. It could also add a great deal of additional paperwork and hoop jumping to a claim. So find the correct value for your vehicle and stick with that value on all policy coverage.
This rule is very easy to get caught on, and you can easily miss that you have Car Insurance quoted more than one amount. This rule is broken most often with liability coverage. It makes no sense to set your financial security at one million dollars for 1 million dollars on your home but only 100,000 dollars on your car insurance. With either scenario if a major accident occurs you’ll be held footing the bill. You need to be sure you are covered up to what you are worth or the potential of what you may be worth in the future. So keep your numbers consistent.
More complete information about car insurance: BESTIENSURANCE
Now that you understand these three simple rules you are ready to get the best value on your car insurance policy.