The end of the year is approaching and I know many of you are reviewing your expenses to ensure you are paying the best price on things you have to pay for. Auto insurance is good one to start with. The tips below are solid and provide a step-by-step guide for reviewing and improving your policy.
It is a good idea to review your auto insurance policy on a regular basis. Coverage needs can change as the years pass. There is also a good chance that rates have fluctuated since you first bought the policy. Reviewing your coverage and your coverage options can help you maintain the right amount of insurance for the right price. Who doesn’t want a more affordable auto insurance policy ?
Step One: Locate the Declaration Page
The declaration page of your auto insurance policy provides a summary of your insurance coverage. It explains who or what is covered as well as coverage limits. This page may also include information about the discounts you are receiving or could be eligible for.
Special tip: If you don’t understand something on your declaration page, contact your agent. He or she will take time to explain it to you. If you don’t understand a term, consult this free car insurance glossary.
Step Two: Review Mandatory Coverage
You have to carry enough insurance to meet required minimums in your state. This coverage is known as mandatory coverage and generally includes bodily injury and property damage liability protection. There is very little that you can do about this part of your policy–you have to do it–but you should make note of coverage levels. Are they high enough? Are they too high? As you are considering the answer, keep in mind that we live in a very sue-happy society. Anyone can be hit with a lawsuit and devastated by the damages that today’s judges and juries often award.
Special tip: You can keep liability coverage levels low on your auto and home insurance policies if you have an umbrella policy. Umbrella policies provide personal liability coverage and are cheap to buy. A policy that provides $1 million in coverage can often be purchased for as little as $150 each year.
Step Three: Review Optional Coverage
Optional insurance protection can include collision and comprehensive coverage, loan lease coverage, uninsured or underinsured motorist coverage, towing and labor, property protection, and limited property damage liability. Collision and comprehensive insurance are a must if you have a nice vehicle. Collision pays for damage done to your vehicle in a traffic accident; comprehensive pays for damage done to your vehicle in a non-traffic related incident. Uninsured or underinsured motorist coverage pays for your expenses if you are involved in an accident with an uninsured driver. The other types of optional insurance mentioned above are largely unnecessary and typically cost more than they are worth. The exception is property protection–this coverage may be worthwhile if you keep a lot of valuable personal property in your vehicle.
Special tip: Increasing the deductible on your collision coverage from $500 to $1,000 can save you an average of $75 each year. You can also cut costs by raising the deductible on your comprehensive coverage.
Step Four: Review Your Discounts
Your insurance policy should also include a list of discounts or credits that you are receiving. Discounts can include anything from a multi-policy discount to a good student discount. Some policies also list savings that apply to the safety features on your vehicle. These discounts may be mixed in with other information on your declarations page or detailed on a separate page.
Special tip: If you do not see a list of discounts or credits anywhere in your policy, it is probably because you aren’t receiving any special pricing. Ask your agent about this immediately–everyone qualifies for some type of discount.
Step Five: Make Improvements
Now that you have all of the information you need, you can begin making improvements to your auto policy. The best place to start is by filling the gaps in your insurance coverage. Depending on your individual situation, you may need to change or reduce your coverage limits or purchase optional coverage, such as towing coverage, uninsured motorist coverage, or personal injury protection.
You should also look for ways to save money. You can do this by getting quotes from other companies or by asking your current company about discounts you may be eligible for. Some of the discounts I get on my auto insurance policy include a group member discount (3%), a loyalty discount (4%), a safe driver discount (10%), a multi-policy discount (15%), and a good insurance score discount (43%). In all, my discounts save me 75% on my auto insurance premiums. I don’t even want to think about how much I might be paying without them.
What other tips do you have for improving your policy?
This is a post from Bailey Harris, who writes for www.carinsurancequotes.net.
(Photo by Hamed Saber)