How much insurance do you need for yourself?
You probably don’t need to spend a lot of money on a Personal Injury Protection policy. You should be covered if you have health insurance and disability insurance through your employer. Just buy the required minimum.
You do need to make sure you have adequate coverage against uninsured and under-insured drivers. It’s relatively inexpensive in most states (something like $40 a year for $100,000 worth of coverage) and if you are in a collision with an uninsured driver, will help cover costs your health insurance won’t. If you’ve decided to carry BIL for $100,000/$300,000, do the same for yourself.
Collision and comprehensive coverage is worth having if you would want to repair or replace your car after an accident. These policies have a deductible (the amount you have to pay out-of-pocket before coverage kicks in), and they pay out based on the current value of your car, not what you paid for it.
Choose the highest deductible you can afford, because a higher deductible will significantly lower your premium. You’re seeking coverage for major damages to your car, not for every little thing that can go wrong. It’s better to spend $500 of your own money on minor repairs every so often than pay an extra $50 a month whether you need repairs or not. Save collision insurance for when you have car repairs that cost thousands, not hundreds. Remember, if you submit a claim for every little thing, your premium will increase.
A handful of states require car owners to carry no-fault insurance, policies that pay out no matter which driver is at fault in an accident and limit your ability to sue other drivers.
Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Utah and Puerto Rico requires car owners to carry this protection, though the rules around how these policies work vary by state. These policies tend to be expensive, so be sure to shop around for the best deal if you live in a no-fault state.
How to Shop for Car Insurance
Once you’ve decided how much car insurance you need, it’s time to begin shopping. Auto insurance policies vary widely depending on your car, your driving record and your credit, so it’s wise to do some research.
Direct sellers – These companies sell coverage directly to you, bypassing traditional insurance agents. Since there’s no agent, there’s no commission; theoretically the savings are passed on to you. But these insurers accept only the best drivers, so you may have trouble qualifying for coverage if you have a history of accidents or moving violations.
Large national brands – Allstate are better equipped for drivers with a bit of a blotchy past, and their rates are usually pretty good (they may even be able to match some of the offers from the direct sellers). These companies sell through local agents, but their agents are exclusive—a State Farm agent sells State Farm coverage and nothing else, so you’ll have to do your own comparison shopping.
Independent insurance agents – These sellers offer all kinds of insurance from many different companies. If you have any issues affecting your ability to get coverage (such as a patchy driving record or a teenage driver in your house) independent agents can usually find you better coverage at better prices than what you’d find on your own. Ask friends and family whether they have an insurance agent they would recommend.
A few tips for negotiating with an insurer:
Ask about all available discounts – There is almost always a way to save money. You may get a discount if your car has anti-lock brakes, if you don’t drive your car that often or that far, and so on. Request a list of all possible discounts to see if you qualify.
Skip towing insurance – It’s better to take that extra money and join an auto club instead. In addition to towing, you’ll have roadside assistance when you need it.
Consider glass insurance – You can chip a windshield at any time, and auto glass is expensive to replace. Just make sure that glass is part of your comprehensive coverage, and not as a separate policy, which can be costly