Car insurance can be confusing, but it doesn’t have to be expensive. There are many different types of car insurance, and choosing the right one will make your monthly payments cheaper overall.
Before you buy any type of car insurance, it’s important to ask yourself the following questions so you know exactly what you’re getting and how much it will cost you every month.
Comprehensive Car Insurance
One major mistake driver makes when they compare car insurance rates and policy coverage options is equating higher coverage limits with a lower monthly payment.
A more comprehensive auto insurance policy with low deductibles, for example, will cost you more each month than a high-deductible policy but will cost less if you file a claim.
You can save money on comprehensive insurance by taking advantage of various discounts and increasing your deductible level in return for lower monthly premiums.
For instance, bundling home and auto policies together via an umbrella liability coverage policy can help you save 10% or more per year on your premiums.
If you’re comparing different types of car insurance policies, be sure to factor in all possible discounts before deciding which one is cheapest for you.
When you’re comparing car insurance options, a good rule of thumb is to consider how much you would be willing to pay out-of-pocket in order to replace your vehicle.
If your answer is nothing, then a comprehensive auto insurance policy will be right for you.
Third Party Only
If you have a clean driving record, it may be cheaper to go with third-party only insurance. This type of policy provides coverage in case you cause an accident or damage someone else’s property.
It does not provide coverage for damage to your car, medical bills if you get injured in an accident or other injuries sustained by people in your car.
Depending on where you live and how many miles you drive, third-party only insurance can cost $100 to $400 per year for full coverage.
If you’re buying insurance for a car you share with other people, third-party only can still work. For example, if you’re a parent of a teenage driver and your child has their own policy but shares your car, it might be cheaper to get insurance on your vehicle that covers them.
This will depend on your coverage options and where you live, so consult an agent to find out what’s best for you.
In most cases, though, full coverage will be more cost effective in case someone in your household does need medical attention or in case there are damages to repair.
Some companies do offer discounts if everyone on your policy has good driving records and is listed as primary drivers.
Third Party Fire and Theft
This type of car insurance is probably what you think of when you think car insurance. It’s also generally one of cheapest types.
With third-party fire and theft, your premium typically depends on whether or not your car was damaged or stolen in a recent accident and if it has anti-theft devices installed.
Be sure to have at least one; most states require alarms for new cars. If you need to file a claim, repairs are paid through an existing policy with an insurer chosen by your agent, so make sure that insurers give customers good service on claims (more on that below).
Also, keep in mind that while comprehensive coverage covers damage from every possible cause besides a collision—including theft—it only kicks in after an accident has already occurred.
Alternatively, you can go with comprehensive coverage and get more protection for your money. With a comprehensive policy, you’ll be covered if your car gets stolen or damaged by events like hailstorms, floods, earthquakes, vandalism or falling objects.
Comprehensive coverage also includes towing and labor costs following an accident—unlike regular third-party fire and theft.
The downside is that it’s more expensive than third-party fire and theft coverage because it gives you so much more peace of mind.
Third Party, Fire & Theft and Personal Injury
Third-party, fire and theft car insurance are less expensive than personal injury protection because it covers damage to your vehicle or other cars, but not damages to you or passengers.
Fire and theft car insurance generally covers your car if it’s stolen, damaged by fire or vandalized—but doesn’t cover you if you’re injured in an accident while driving.
If you want that coverage, personal injury protection (or PIP) can provide extra help. Even though it tends to be more expensive than third-party, fire and theft coverage.
PIP pays for some of your medical bills after an accident and may pay for lost wages if you can’t work due to a covered injury.
Whether you’re shopping for your own car insurance or looking at rates for a family member, consider all of your coverage options.
Different types of car insurance may offer different levels of coverage at different price points, so comparing prices and policies can help you find a policy that fits within your budget.
You should also check to see if any discounts are available in your area. For example, many insurers offer discounts for good drivers or certain types of vehicles.
What other car insurance tips would you like to hear about?
The cheapest type of car insurance depends on a few factors, including your driving record, where you live and what kind of coverage you want.
But in general, when it comes to automobile coverage for yourself and others injured or damaged in an accident, here are some tips:
Your driving record: If you have a blemished driving history – lots of speeding tickets or accidents – then consider opting for higher deductibles (which lowers your premium) instead of collision and comprehensive coverage (which pay out when something happens to your car).
This may seem counterintuitive, but insurance companies typically don’t look at deductibles in calculating premiums.
If you live in a city with a high crime rate, there’s a good chance your car will be stolen. If so, also consider adding vehicle anti-theft protection to your policy.
This may come in the form of an additional deductible or premium for theft and vandalism. Your state’s regulations:
Each state has different laws that impact what kind of coverage you need to buy for both yourself and others injured in an accident.
What’s your favorite way to save money on car insurances?
Maybe you can save on your car insurance by owning a small sedan or hatchback, or maybe you’ll get a break for being a good driver.
As you know, there are plenty of different ways to save on car insurance, but which one offers you the best deal?
Before comparing your options, it’s smart to make sure that none of them come with any catches.
sssWe’re going to cover what we think are some of the best ways to save money on your next auto policy, but before we jump in, let’s take a look at what kind of discount may be available—even if it isn’t as obvious as others.