How to Find the Right Comprehensive and Collision Insurance for Your Vehicle
If you are in the market for car insurance, it is important to understand how the various coverage options work. Chances are your state requires that you carry a minimum amount of liability protection, which covers property damage and medical costs to other drivers and their vehicles.
In addition to that required coverage, you need to consider comprehensive and collision protection. Comprehensive and collision insurance pays to repair or replace your vehicle in the event of an accident that is your fault, or when your car is damaged by hail, falling trees and other hazards.
The problem is that comprehensive and collision coverage can be expensive, so it pays to shop around carefully. There are a number of things you can do to lower the cost of this coverage without sacrificing the protection you need.
Shop for Insurance Before You Choose a Car
If you are in the market for a new car, it pays to include car insurance rates in the vehicle selection process. Some vehicles are simply more expensive to insure than others, and the best time to find out about those discrepancies is before you own that car, truck or SUV.
You can start by making a list of all the models you are considering. Then contact your car insurance company to review coverage estimates for each vehicle. Your agent may not be able to provide you with an exact quote, but he or she should be able to give you a ballpark estimate that will make shopping easier.
Think Carefully About Your Deductible
If you are able to self-insure a higher deductible, you might be able to save a lot of money on the comprehensive and collision portions of your car insurance policy. Self-insuring the deductible simply means putting aside enough money to pay those costs in the event of an accident.
It may not take as much time to build that nest egg as you think â€“ putting aside just $20 each pay period would give you nearly $500 by the end of the year. Once you have that money set aside, you can contact the insurance company about raising your deductible and lowering your monthly premiums.
Consider the Age and Value of Your Car
Chances are your car is very valuable to you, but its value on the open market can be another story. If you drive an older model car, truck or SUV, it may no longer be worthwhile to carry comprehensive and collision coverage on that vehicle.
There is no hard and fast rule, but a good rule of thumb is that comprehensive and collision coverage should be discontinued once the resale value of the vehicle drops below $2,000 to $3,000. If your vehicle is worth less than that, it might make more sense to drop that extra coverage and put the premium savings in the bank. If you do have an accident, you can use that emergency fund to replace your car, or at least put a down payment on a new vehicle.
Gillian Kearney is a personal finance consultant. She enjoys sharing her insights on various personal finance blogs. Visit Monkey Insurance for more details.