January 6, 2012

Ways To Assess The Value Of An Auto Insurance Policy

When buying auto insurance, many drivers tend to buy inexpensive policies. Cheap car insurance can lead to big savings, but there's more to a car insurance policy than its premiums. To get the best possible deal on insurance, drivers should try to assess the total value of their insurance plans.

In order to assess the value of an auto insurance policy, it's helpful to consider how the policy will operate when the time comes to make a claim. Ideally, an auto insurance policy should have sufficient coverage to financially protect a driver from a variety of possible dangers. However, many drivers sacrifice coverage to try to get cheap car insurance policies, neglecting important coverage types like personal injury protection (PIP), which protects from some of the medical costs of an accident for an insured driver and passengers. Likewise, many drivers don't buy comprehensive or collision coverage unless their banks require it, instead paying only for state-mandated liability coverage. This can be problematic and can severely decrease the value of an auto insurance policy, but there's no set formula to figure out exactly how valuable different types of coverage might be to different drivers. Insurance buyers should consider their own circumstances when choosing coverage types in order to make an educated decision.

Coverage limits and deductibles certainly affect the value of a policy and should be carefully considered when making a purchase. In general, car insurance deductibles should be in line with coverage limits. For instance, if a policy provides $20,000 of bodily injury liability coverage, a deductible of $2,000 would severely restrict the value of this coverage. Lower deductibles push up the cost of car insurance, of course, so many drivers default to high deductibles. Again, drivers should match their coverage limits and deductibles to their individual circumstances. For instance, a low deductible with a high comprehensive coverage limit might not make sense for a driver with an inexpensive vehicle, but might be well worth the money for another individual.

Cheap car insurance with high deductibles and low coverage limits often has a low value overall, as it won't really provide any benefits when the time comes to make a claim. Fortunately, it's fairly easy to assess insurance value. Drivers can get car insurance quotes online and use them to compare coverage and deductible options, which ultimately lead to a balanced policy that will provide adequate financial protection. What's more, a well-balanced policy will have a better overall value, and by checking insurance rates before buying, drivers can still save a tremendous amount of money on their insurance policy with only a few minutes of work.