Car Insurance

Type "car insurance" in your search engine. There you will find around 55,500,000 entries, and thousands of companies promising you that they- "are the best." This makes it difficult to know what insurance to buy, how to buy it, where to buy it, etc.. No one can determine what insurance is best or what company is best; because every car owner has different needs, the answer will interchange. However, car insurance knowledge can allow a person to answer that question for themselves. Here is a layman guide to car insurance, that may help you do that.

Depending on what country and state you live in, car insurance may be compulsory. In the U.S requirements will vary by state. Some states have laws whereby you must have car insurance before you can get a drivers license. A few states issue jail time for failure to have insurance. Others just have a monetary fine for not having insurance. The best way to determine car insurances laws (by state) is to look at that particular states DMV website, or directly contact them.

Foremost, car insurance has one sole purpose: supply protection from mass loss during a vehicle accidents, and protect the owner from liability. This will be the initial building block, from which a car insurance policy will be tailored. Here are the basic types of insurance:

Liability Insurance

Liability car insurance protects the owner of the policy when they cause an accident. It basically covers the damage and injury you do to something or someone else with your car. It actually is divided into property damage and bodily injury; referred to as split limits, (ex: 50/25/50). The first number refers to monetary coverage limit for bodily injury to another person. The second number refers to the monetary limit for bodily injuries caused to everyone. The third number is the monetary limit for property damage. As stated above, some states require a minimum coverage amount. However, the numbers can be adjusted upwards of mandatory limits.

Underinsured and Uninsured Motorist Insurance

Either of these will pay for vehicle repairs and injury if you are in an accident with an uninsured or underinsured driver.

Collision Insurance

Collision insurance covers your vehicle when you are "at fault" in the car accident. Part of the policy includes an insurance deductible. A deductible is the amount of money you will pay before the insurance covers the rest.

Comprehensive Insurance

Comprehensive coverage is the same as collision, but adds "acts of gods" in the coverage.

To build upon your basic insurance plan, you need to ask yourself a question for each aspect of the policy: "How much risk am I willing to assume?"

Do I want to have a low deductible, but pay more for my policy -or- do I want a high deductible, pay less for my policy, but assume a greater out of pocket expense? For ex: If you have $1000.00 readily available for car repairs, then you may want to opt for a higher $1000.00 deductible, and save money on your car insurance policy. Whereas, if you know that you will not have the higher deductible amount, then you may want to choose a lower deductible.

Do I want to pay a higher amount for collision insurance, and know that if my car is totaled, the insurance will pay me the market value of the car -or- pay a lower price for the policy, and assume the risk if my own car is totaled? If you have a car financed, the lender will answer this question for you. Lenders require you to carry collision insurance. However, if your car is paid for, and only worth a couple of thousands of dollars, you need to decide if you want to assume the risk of loosing your investment vs. paying for a lower policy.

Ask yourself: what is the risk of tornados, floods, theft, fire, vandalism, etc.. to the car, and can I cover the cost of the damage? Do I have the money to cover the risk -or- should I pay a higher insurance rate for comprehensive coverage?

Am I willing to take on the risk of an uninsured driver hitting me, or do I want uninsured motorist coverage? If an uninsured driver hits you, the typical insurance policy does not cover personal injury without this policy. Uninsured motorist coverage also covers pain and suffering related to car accidents.

Continue to ask these questions on every element of your policy. Be sure to read the fine print, as to what each policy element covers. For example: some companies define "acts of God" differently. While one company may cover tornados, others may not. If you are not 100% sure what a word means, ask the insurance agent!

Once you work out your basic policy plan, there are some additional policy features. Some companies include these features in their full coverage policy, while others do not. So, if you are interested in any of these features, ask your insurance agent if they are included in your plan. If they aren't, you can add them in for additional costs.

Auto glass insurance- reduces or eliminates the cost of repairing car windshields and car windows.

Car rental- covers the expense of renting a car as long as the reason you need it was covered elsewhere in the policy.

Auto towing- covers any towing need.

Emergency roadside assistance- covers roadside repairs and flat tires, but ends once the car is moved to a garage.

Finally, here are some tips to get a discount: Bundle your insurance policy. Most companies offer a discount for multiple policies. If you have several items that need insurance, you will get an overall lower rate on each. Many companies offer discounts for teenage drivers that have good grades and complete a drivers education course. Try to buy compact cars, rather than SUV's and sports cars- the rate is cheaper. For drivers that only occasional use their vehicle, a "cents per mile" is much cheaper. It works off of a prepaid system; where you buy prepaid miles, and the insurance is valid until the odometer reaches the amount of miles that you purchased. Not all insurance companies provide this option.

This should provide a good basis on where to start. Knowing the basics of car insurance will help you ensure that you are getting quality insurance, that you can afford. Now, you can start price shopping.