Auto insurance rates vary widely. They depend on many factors, including how much you drive and where you live. The higher the value of your car, the more it will cost to replace it. A new Mercedes-Benz GT sports car will cost more to insure than a new Honda Civic compact car. That means if your Mercedes-Benz GT was stolen, your insurer could be liable for as much as $100,000, while the Honda Civic might be worth only $20,000 if stolen.
Bodily injury liability coverage protects you from claims from other drivers and passengers. If you are found at fault in a car accident, this coverage will help you pay for medical expenses, lost wages, and pain and suffering. Property damage liability insurance covers damage to other people’s property, including fences, equipment, and vehicles. Collision coverage pays for damage to your own car. Although collision coverage is not mandatory, it is often required by a lending institution.
In some states, you must have personal injury protection insurance. It covers medical expenses for the policyholder, passengers, and pedestrians regardless of fault. It is also helpful if you’re not the at-fault party. This type of coverage will help pay for medical bills and other expenses incurred by you as a result of the accident. Having this coverage is a smart move for all drivers. And don’t forget to check your car insurance policy to make sure you’re paying enough for it.
Besides collision and comprehensive coverage, there’s also the optional underinsured motorist coverage. It pays for injuries, death, and property damage caused by the other driver. Depending on your state’s laws, this coverage may be required for auto loans. It can also include a deductible. If you’re hit by an uninsured motorist, this coverage will cover your medical expenses and provide financial assistance. However, you can also choose not to carry it if you’re driving in a state with low insurance requirements.
Another important aspect of auto insurance is the deductible. You must pay a certain amount before the insurance company will cover the rest of the expense. Usually, a $500 deductible will cover an expense up to $1000, but a $1000 deductible can save you as much as nine percent on your premiums. In addition, you can raise your deductible to reduce your monthly payments. Many insurance companies offer lower premiums to people who meet certain criteria.
A consumer shopping tool will explain how to buy auto insurance, and can help you make the right decision. The Consumer Shopping Tool for Auto Insurance is maintained by the NAIC Transparency and Readability of Consumer Information (C) Working Group. The NAIC also publishes the Auto Insurance Database Report, which provides statistics about average auto insurance costs nationwide. This report includes state-specific data, and the number of claims made in voluntary and residual auto insurance. These reports are updated annually.
Collision coverage is another important factor in auto insurance. Collision coverage pays for repairs to your car if someone else hits your car. If you want to avoid a large repair bill later, collision coverage may be worth the cost. Depending on the model of your car, it may even be a requirement for your lender. If you’re financing a new car, collision coverage may be required by your lender. You’ll need to pay a deductible for it.