This is the first in a multipart “How To Not Suck… ” series on insurance. Upcoming installments will cover homeowner’s, life, long-term care, and disability insurance.
Whether you just drove off the dealer’s lot in a shiny new vehicle or you’re puttering down the highway in an old clunker, you must protect yourself, others, and your two/three/four/eighteen-wheeled investment with auto insurance.
Cheap rates are important, but cheap means nothing if your policy won’t cover you if you’re in an accident, or the victim of a wayward grocery cart, or the target of a penny attack.
Here are 15 things you may not know — or that you need to know — about insurance for your wheels.
1. Minimums? What minimums?
Sure, buying the minimum amount of coverage allowed by law (or by your lender) will save you money, but it won’t save you anything in the long run if you ever have a claim. For example, if you choose a high deductible policy, you’ll have cheaper premiums. But that also means you’ll have to fork out more cash before you can make a claim. If you have a huge emergency fund, maybe that works for you, but you could spend more in the long-term. (Take a look at your state’s minimums but seriously consider taking more than the absolute mininum.)
2. Yes, larger deductibles mean a lower premium, but think about what an accident would cost you.
Let’s say you have $5,000 in repairs. A $1,000 deductible means you’ll have to pay out-of-pocket for 20 percent of the costs. If you have a $250 deductible, you’ll only be paying one-twentieth of the costs. You’ll have to weigh that with the difference in premiums for high-deductible policies.
There are discounts for everything out there, and that includes your auto insurance.
Many vehicles come with safety features and alarm systems that will lower your premiums (so don’t buy without talking to your insurance agent, and also read more about which cars are the most and least expensive to insure ).
You may also save by having a good driving record, taking a defensive driving course and being a customer for a certain number of years. Ask you agent about the discounts for which you might be eligible.
4. In many states, where rates are set by law, cheaper insurance simply means less coverage.
If you live in a state where the rates are pre-set, think twice before taking a less expensive policy because it may not give you what you need. Check the state-by-state requirements. and you can visit your state’s insurance department for more information. And if it’s your thing, learn more about trends in state regulation and insurance rates .
5. Combining policies can save you money…
6. But it still pays to shop around.
That’s right — having a red car doesn’t mean you’re a bad driver or that you’ll drive irresponsibly — and, contrary to a popular myth, it therefore has nothing to do with the price of your insurance.
14. Thieves don’t care about the price tag.
You might think your wheels are the hottest, but those stolen most often are nabbed because their parts earn a lot for the thief. How often your make and model is stolen can have an impact on your premiums, too. Take a look at the most commonly stolen cars of 2012, the most recently available year.
15. Review, review, review.