How to Choose Car Insurance Coverage Limits
Don’t Settle for State-Minimum Insurance
Now that you know some reputable companies, the next step is figuring out how much coverage you really need. You might be tempted by the lower price of state-minimum insurance, but if you get into an accident you could be left thousands of dollars out of pocket. It pays to invest in a policy that has a more generous limit than the minimum. It’s not a good idea to risk your health or personal property in the case of a costly accident.
Consider Your Assets
If you are a homeowner and have lots of other assets, it’s a good idea to buy more insurance than what is normally offered. With more coverage in place, you can protect yourself and your family from running out of coverage if you have a nasty wreck. It’ll also protect you from someone who plans to go after your assets in court.
How to Find the Cheapest Insurance Rates
Ask for a Discount
Even the best car insurance companies offer discounts, so don’t cheat yourself out of a money-saving opportunity by forgetting to ask. Common discounts include bundled policies, having good credit, a zero claims bonus etc. It’s also becoming increasingly common for insurance companies to offer a discount if you agree to install an electric device that monitors your driving. Allstate Insurance offers a 30% discount for this, called Drivewise.
Take Advantage of Low-Mileage Discounts
If you work-at-home or don’t drive too often, certain insurance companies will give you a discount. To qualify, you must prove how much you drive each year. It’s hard to name a mile threshold as each insurance company has different limits. The best way to find out is to contact the insurance company that you want to apply for coverage with.
Consider Raising Your Deductible
If you want to pay less on your monthly insurance payments, you have the option of raising your deductible. For example, if you have a $500 deductible you’ll pay higher monthly costs than if it was $1,000. But, don’t make the mistake of raising your deductible to a number higher than you can afford. Set aside some cash, or put some extra into your emergency fund, so that you’ll be able to afford your deductible in case you are in a wreck.
Reduce Coverage on Older Cars
It’s a good idea to get full coverage if you’ve just purchased a new or fairly new car. But, if you drive an old beater, liability insurance might be a smarter move. To figure out if this is a good idea for you, find out how much your car is worth. If the cost of full coverage is more or near to the value of your car, changing your policy to liability-only can help you save money without risking your financial life.