Getting car insurance has become more complicated in recent years.  Not only does there seem to be an ever-growing number of insurance companies to choose from, different types of coverage and bundle-deals often make assessing similar coverage between several provders difficult.

With that being said, there are always two questions to consider when shopping for car insurance.  First, how much coverage do I need and second, how much will it cost?  While some online tools will help to answer the second question, figuring out what you need is a bit more nuanced.

Here is a quick overview of some key things to keep in mind when shopping for car insurance coverage.

1. Know the Rules in Your State

Did you know that drivers in Virginia, as well as a few other states, have the option of going uninsured if they pay an additional $500 when they register their car?  While this might sound like a great way to save money, this also means you will be personally liable if you are in an accident. You also risk getting a ticket or having your car impounded if you drive it to a state that does not offer this option.

The majority of states in the U.S. have laws against driving without insurance, so be a responsible driver and be sure you know the laws in your state before purchasing a car. Knowing the laws will help you choose the best plan to help protect you, your family, or your business.

2. Know What’s Included

When most people talk about auto insurance they assume it covers property damage, injuries, and any liabilities incurred during an accident,  but this is not always correct. Some policies will cover bodily injury liability, but not provide a rental car during repairs should you damage your vehicle. In addition, you always want to know your coverage amounts and deductibles as they can often be unwelcome surprises when you need them.

Most states mandate a minimum liability coverage level, but you will want to check to see if your policy includes personal injury, medical payments, bodily injury liability, property damage, collision, uninsured and underinsured motorist protection, just to name a few.

As you can imagine the cost of coverage goes up with each added protection point, but is it worth risking your family, your home, or your business to save a few dollars?  The answer is most likely, no. Find out what is included in your coverage and then contact your agent to find out the cost for additional coverage.

3. Know Your Deductible

While having a high deductible is a good way to lower the cost of your insurance policy it also means that you will face higher out-of-pocket expenses if you need to make a claim.  Knowing what your deductible amount is will help you plan according if an accident does occur and you need to file a claim.

4. Know What You Will Use the Car For

Is the vehicle primarily used for work or for your family?  This is an important question and the answer will help to determine how much your policy will cost and what kind of policy you’ll need.

For example, if you use your car to deliver pizzas, you’ll need a commercial auto policy in addition to a personal auto policy. This is because insurance companies problaby won’t cover any losses you incur if the loss happens while you’re using your vehicle for commercial purposes.

So, while you could end up saving money, you will also run the risk of being effectively uninsured if an accident happens. It’s very important to make sure that you obtain coverage that matches the vehicle’s primary use.

5. Know What Your Bank Requires

Odds are that you used a loan to purchase your vehicle.  If so, then you will need to find out what coverage your bank requires.  After all, you have used their money to complete the purchase and they will want to make sure their asset is protected.

One coverage requirement, which has become increasingly popular in recent years, is what is known as a gap policy.  This policy will cover any gap in what the vehicle is worth and how much is left on the loan. It’s not that the bank is trying to save you money if there is an accident; it’s just that they want to make sure they get their money back.

So before you run out and purchase that new car, it’s extremely important to figure out exactly what sort of coverage is required in your state, as well as the type of coverage you’re looking for. An experienced insurance agent will be able to help answer questions you may have regarding your car insurance policy, so don’t be afraid to ask questions if you don’t fully understand what you’re paying for.

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