Saving a Bundle on Car Insurance / Part 1
For the average consumer, insurance is a major expense. Yet many people spend little time evaluating their insurance needs and don't comparison shop. If you neglect to shop for insurance, you may pay more than you should, get coverage you don't need, lack coverage you do need, or put yourself and others at risk if your company refuses to pay your claim. Car insurance is necessary and, in some states, mandatory. Without insurance, an accident subjects you to liability that could wipe out your assets.
THE TYPES OF COVERAGE
• Property damage / bodily liability coverage. This pays for damage your vehicle does to others and their property for which you are liable. If you should hit another car and hurt someone and are found to be at fault, you are liable to pay for the damage and medical care. Liability coverage insures you for that cost. Given the high cost of medical care and the money that juries sometimes award victims, it pays to have adequate liability coverage. Often this coverage is described by three numbers. The company insuring a person who has 100/250/100 coverage will pay up to $100,000 to any one person injured in a single automobile accident, a maximum of $250,000 for total bodily injuries when more than one person is injured in an accident, and up to $100,000 per accident for property damage.
• Collision coverage. If your car collides with another object or turns over, collision coverage pays for the repairs. It makes sense to carry collision coverage if your car is worth quite a bit, but if it's not worth more than $2,500 or so, don't carry it. The insurance company will only pay you the value of the car anyway, and the money you save on premiums could be used toward a future car purchase.
• Comprehensive coverage. Comprehensive coverage pays for theft and damage done to your car by something other than a collision, such as fire, vandalism, hail, flying rocks, windstorms, lightning, or riots. If your car is fairly new or contains expensive stereo equipment, you should carry comprehensive coverage. The car's fair-market value is the standard by which payment is given. Even if your car is older, this coverage can easily pay for itself in repaired windshields, repaired damage committed by vandals, and hail dent removal.
• Uninsured / underinsured motorist coverage. This coverage pays for the medical bills related to your injuries if another driver who injures you has no insurance, doesn't have enough insurance, or flees the accident scene and can't be located. In some states this coverage is required. Even if you have good disability, life, or health insurance coverage, you may want to purchase coverage of this type.
• Medical payments coverage. This pays the medical bills for you and your passengers if injury occurs while in, entering, or leaving your car—no matter who is at fault. It can cover such costs as funeral expenses and lost wages, too. Your insurance company pays these costs without your having to prove that the other party involved was at fault.
• "No-fault" coverage. Designed to eliminate expensive, ongoing lawsuits to find out who was at fault in an accident, "no-fault" insurance means that your own coverage pays for your injuries, regardless of who is at fault in an accident. Your insurance company will pay for the injuries you (and perhaps your passengers) sustain from an auto accident up to the no-fault policy limits. It will pay for such items as medical and hospital expenses and loss of income. It also covers any person driving your car with your permission but does not cover damage to vehicles. If your state has no-fault insurance, your insurance company will pay your medical expenses. If statutes permit, your company will then collect any money that is due from the other party's insurance company. Not every state has a no-fault law, so check with an insurance agent or state insurance official to determine what your insurance needs may be.
POINTERS ON HOW TO SAVE
1. Select high deductibles. The deductible is the amount you must pay for a loss before the insurance company starts paying. The general rule of thumb is to choose the highest deductible you can afford in order to reduce your premiums. If you can afford to pay the first $500 of a claim, evaluate the premium cost of a $500 deductible versus that of a $250 deductible. For the extra premium you would probably pay every year for a $250 deductible, the $500 deductible may save you much more money. Also consider the benefits of having higher collision and comprehensive deductibles on a newer vehicle and dropping all comprehensive or collision insurance on an older vehicle unless it is a valuable antique. 
(Read part two)
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