Protect yourself – and your pocketbook – when buying car insurance

You do have choices when buying car insurance – even within the options offered by a single company. Read on to learn how to make the best choices possible so that your insurance package is both cost-effective and provides the coverage you need in the event of an accident.

Don’t skimp on liability coverage. This is a mistake many drivers make. They take the state minimum required liability coverage, which is totally inadequate when an injured person could spend days in the ICU, remain in the hospital for weeks, and face a lifetime of disability. A serious accident unsupported by adequate liability insurance could be disastrous.

Try to get discounts. The easiest way for most people to receive a discounted premium is to bundle their home insurance with their auto coverage and purchase both from the same insurance company. By doing this, most people save at least $100 to $200.

Don’t always opt for the low deductible. A low deductible may give peace of mind, but it can be an expensive way to manage risk. Even if you file a claim every two or three years, you will probably come out ahead by choosing the higher deductible. And if you never file a claim, you will have saved a significant amount.

Pay up front if possible. Insurance companies charge a service fee if you pay monthly rather than annually. The cost of these fees can amount to $100 or more every year.

Don’t opt for the minimum uninsured motorist coverage. As with liability coverage, state UIM minimums are seldom enough to cover yourself and your passengers if you are hit by an uninsured motorist. In fact, there is a bill on New York Gov. Cuomo’s desk that will promote the purchase of supplementary uninsured/underinsured motorist (SUM) coverage. It will work this way: When consumers chose to purchase increased liability coverage, they will automatically receive additional uninsured, underinsured and hit-and-run coverage.

Following these guidelines could both save you money and protect you in the event of a catastrophic motor vehicle accident.

Source: New York Times, “How to Know if You Have Enough Auto Insurance,” Aug. 24, 2012.