Auto Insurance

Auto Insurance

In most states, drivers are required to have liability insurance for each drivers, for accidents, and for the other person’s car in case of an accident.

How much you need: Generally, insurance experts counsel that you buy as much liability coverage as you’re worth. You should also consider an “umbrella policy” that covers both your home and car.

What your options are: Collision and comprehensive coverage accounts for 30 percent to 45 percent of your premium. If the cost of your collision and comprehensive insurance is more than 10 percent of your car’s Blue Book value, it probably makes sense to drop it. Remember, though, that if you get into an accident, you’ll have to decide if it’s worth your car fixed.

Uninsured or underinsured motorist coverage also is sometimes desirable, but it is probably cheaper to purchase it in your home or life policy. You may be able to slash the price of your car insurance by adding safety or anti-theft features to your car, maintaining a safe driving record or simply by driving a low number of miles each year.

Bahamas, cars. Photo: Elena

What to watch out for: For an old jalopy, the insurance cost may not be worth the amount you’d receive in the event of an accident. The most you’ll receive if your car is damaged is the Blue Book value of the vehicle – not that much if your car is more than five years old.

A last tip: Medical payment, income replacement, and rental car insurance can add substantially to your premiums and may be covered elsewhere. Some credit card companies, for example, offer rental car insurance.