Car insurance protects you from many expenses if you get into an accident or suffer other damage to your vehicle. It’s essential for avoiding significant debts, and most states require at least some coverage.
Car insurance rates have risen almost 30 percent since 2011. Fortunately, you can avoid higher prices by shopping for your next policy carefully. Here are some things you should know about choosing auto insurance in 2020.
Common Insurance Terms
Before you start shopping, you’ll need to understand some basic terms that insurers use often.
- Collision: Collision insurance covers repair costs if your vehicle collides with another car or an object like a fence. It only covers damage to your ride, not other cars or property.
- Comprehensive: Comprehensive insurance also covers car theft and damage from bad weather, fire, flood, vandalism and falling objects. It pays for repairs needed after hitting animals such as deer as well.
- Liability: Liability insurance pays the expenses of the other party if the accident was your fault. It also covers your defense if you become involved in a lawsuit. Bodily injury liability covers medical expenses, and property damage liability pays for any damage caused by your car.
- Uninsured or underinsured motorist coverage: This protects you from people driving without insurance by paying your medical bills if the person at fault doesn’t have the insurance or funds to cover your costs.
- Medical payments coverage: This type of insurance covers medical expenses for you and your passengers no matter who caused the accident. However, it’s not available in all states.
- Personal injury protection: PIP is similar to medical payments coverage, and it can also pay for lost wages and help with any tasks you can’t do because of an injury, like child care.
- Deductible: Before your insurance starts to cover your expenses, you’ll need to pay a deductible
How to Get Great Rates
To get the best rates, you should know what factors insurance companies use to set their prices. You can save by raising your credit score and taking advantage of discounts for low mileage and some safety features. If you have the savings available to pay for some expenses, you can save on your insurance payments by increasing your deductible.
If you or a family member is part of the U.S. military or a veteran, you can save by choosing USAA auto insurance. They offer discounts for taking a defensive driving course, avoiding tickets or accidents for five years, having a car less than three years old, insuring multiple vehicles and putting a car in storage. Students can save money by taking a basic driver training course and making good grades. There’s also a discount if your parents use USAA or you live on a military installation.
Deciding How Much Coverage You Need
You can also save money by only paying for the coverage you need. If your car isn’t worth much money, paying for comprehensive insurance could be more costly in the long term than paying for repairs or a new car in an accident. However, you’ll need full coverage if you’re making payments for a car loan, and many lenders require it. If your vehicle isn’t worth the amount you owe, you should also get gap insurance. It covers the difference and keeps you from owing payments for a totaled car.
When you shop for auto insurance, keep these things in mind to maximize your savings and get the coverage you need. To make the process even easier, choose a company with excellent customer service.