If you’ve committed yourself to living frugally, you may find that working auto insurance into your budget is challenging. However, it’s not an impossible task. Shopping smart and understanding your options are vital when selecting a coverage solution for your vehicle.
Do the Math With Deductibles
Your deductible is one of the factors that controls how much the premiums for your coverage will be. Simply put, it’s amount that you agree to pay towards repairs or rectifying damages before your policy kicks in and starts reimbursing you. As the Insurance Information Institute explains, it’s “deducted” from your claim and paid out of your own pocket. A higher deductible impacts your premiums by reducing the amount of money the insurer pays towards your claims. Hence, you’re paying a lower cost for less coverage.
There are a few things you should keep in mind when considering whether to opt for a higher deductible. First of all, these amounts typically do not apply to liability claims. Secondly, you should make room in your savings to cover whatever the deductible is on your policy. Increasing it will do you no good if you won’t have the money on hand to pay should any damages result in a claim.
Dig for the Discounts
Chances are, you either own a home or you’re renting an apartment. Right off the bat, both these realities can result in potential discounts on your auto insurance. Nearly all major insurers provide multi-policy discounts or some sort of bundling system. Most commonly, you’ll find that packaging auto with homeowner’s or renters can save you a chunk of change. However, multi-vehicle discounts can also slash your costs down. You might also investigate savings for good students, hybrid vehicle owners, drivers with anti-theft devices inside their automobiles and members of the Armed Forces.
How Much Insurance Do You Really Need?
State laws also dictate how much auto insurance you’ll need to purchase. The New York State Department of Financial Services lists the state’s requirements, including several minimum liability amounts that all motorists must have included in their policies:
- $25,000 for bodily injury to one person
- $50,000 for bodily injury to all persons
- $10,000 for property damage
Additionally, the state insists that you carry “no-fault” coverage of at least $50,000. If you’re paying on an auto loan, you’ll be required to carry comprehensive and collision for your vehicle. Until your lender is paid off, it is the technical owner of your automobile, and they’ll understandably want indemnity protection on that asset. However, if you don’t owe money on your vehicle or if it’s an older model, the III recommends that you consider reducing your coverage.
Besides these products, you may want to discuss some beneficial add-ons with your local insurance agent. Towing and renter’s products will save you some extra money if you’re involved in an accident, because you won’t have to fork out more for either service while your auto is in the shop. Depending on your situation, you may also opt for uninsured and underinsured motorist coverage. Furthermore, policies covering medical payments and personal injury protection provide an additional shield in the case of extremely high medical expenses resulting from an accident.
Fitting Insurance Into Your Budget
It is possible to obtain insurance that offers your vehicle indemnity protection at a reasonable price. However, you need to be open to all your options and understand your coverage needs. Think carefully about your deductible and don’t hesitate to search for discounts. Moreover, you should thoroughly assess what types of policies you need to comply with the law and to make sure damage to your vehicle doesn’t put you in financial distress. With some research and a little help from a trusted insurance agent, you can find the indemnity protection that best suits your finances.