5 Tips when Purchasing Car Insurance
Don’t Take the Lowest Liability Limits
1. Purchasing lower liability limits may seem cost effective, but in the long run it can be costly. If your state has 30/60/25 limits that means your carrier will pay a maximum of $30,000 for an accident with one individual involved and a maximum of $60,000 if more than one person is injured. By purchasing higher limits, you increase the amount the carrier pays and reduce your risk of paying out of pocket for a major accident. Always ask your agent to quote the next level up and determine the cost difference. Usually, it is advantageous for you to purchase the higher limits.
Weigh the Cost of Higher Comprehensive & Collision Deductibles
2. When deciding on which deductible you should take, a few factors are involved. First you should decide the amount you can afford to pay out in the case of an accident. Second, if the cost savings is $25 a year for taking a $500 deductible from a $250 deductible it would take 6 years to equal the difference in the deductible. If you are accident free for 6 years this is a good deal, however, if you have an accident you will lose.
Purchase Uninsured & Under-insured Motorist Coverage
3. With the increase in the number of drivers driving without insurance, having un-insured motorist coverage is a must. Also remember there are a lot of drivers on the road with minimum liability limits so purchasing under-insured motorist insurance is a great idea if you have higher limits.
To Tow or Not to Tow
4. Towing insurance will really depend on your personal preference. Some drivers are members of motor clubs and may not need towing insurance because they have towing within their motor club membership. However, if you are not a member of a motor club you might want to purchase towing insurance in case you have a break-down or accident.
Rental Car Coverage Yes or No?
5. Rental insurance does not pay for you to rent a car on vacation. This insurance can be used by the insured when they are not able to drive their car due to an accident. Most coverages will pay a maximum amount per day with a maximum limit. You might have 30/900 limits which allows the insured to collect up to $30 a day with a maximum limit of $900. If your car is $45 a day you would be required to pay the additional $15. Remember the maximum limit if you exceed the $900 everything above that amount the insured will have to pay.
We hope this information will help you as you determine what limits and coverages you might need.