Insurance Guru: What to Know Before You Commit


Are you one of those people who despises looking around for a new insurance policy? If so, you’re not alone. It’s actually fairly common for people to settle on insurance they keep year after year, despite not being sure whether or not they’re getting the best deal.

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It doesn’t need to be this way. Regardless of whether you’re looking for car, home or life insurance, you can become an insurance guru with all of the knowledge necessary to make a wise choice. To help you better understand, we’ll focus on car insurance for the remainder of this post. Here are four things you need to know before committing to a car insurance policy:

  • state requirements
  • coverage amounts
  • annual deductibles
  • payment options

State Requirements

Insurance is something that’s regulated at the state level. This means car insurance requirements vary from one state to the next. You need to know what your state requires before you can determine whether or not minimum coverage is sufficient.
Liability insurance is the starting point in every state where car insurance is required by law. Liability insurance pays for the damage and personal injuries you cause to other drivers as a result of your actions. It does not cover to repair or replace your car. If you want coverage for your own vehicle, you can purchase it by way of collision and comprehensive insurance.
According to Taylor and Blair ICBC lawyers in Vancouver, some states also require personal injury protection (PIP) and uninsured/underinsured motorist (UM) coverage. You need to know whether these are required in your state. If they aren’t, yet an insurance quote includes them, you’ll have the option of dropping them from your policy.

Coverage Amounts

The different components of your car insurance policy cover different scenarios at various levels. Again, liability insurance is a great example. A policy with liability coverage of 15/30/10 would cover you according to the following formula:

  • $15,000 per accident for personal injury or death of a single victim
  • $30,000 per accident for personal injuries or deaths of multiple victims
  • $10,000 per accident for property damage

Knowing your coverage amounts is critical to making sure you are covered sufficiently. This includes what you pay for PIP and UM coverage. Should you ever be involved in an accident caused by another driver, insufficient insurance coverage may require you to hire a personal injury attorney in order to recover enough money to pay your medical bills.

Annual Deductibles

The area of deductibles is one many drivers find confusing. Simply put, a deductible is an amount of money you agree to pay toward the costs of resolving an accident claim. A policy with a $5,000 collision deductible would require you to pay the first $5,000 toward the repair or replacement of your vehicle and your insurance company would pay the balance.
Agreeing to higher deductibles allows you to get away with a less costly annual premium. The opposite is also true. Lower deductibles result in higher premiums.

Payment Options

Lastly, the payment options offered by your insurance company will partly determine how much you pay in total for your car insurance. You’ll get the best price if you can pay in full at the time of purchase. If you choose monthly or quarterly installments, you will also be paying a finance charge along with various administrative fees.

Buying car insurance isn’t so confusing when you know how the system works. Keep in mind that the principles covered here also apply to other types of insurance as well. So do your homework and become an insurance guru before you commit to your next insurance policy. It is the best way to make sure you’re getting the most attractive deal without sacrificing coverage.