5 Reasons Discount Auto Insurance Is Right for You

With so many insurance companies in business these days, it can be confusing. You might be wondering if one with a discount auto policy could work for you.

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The competitive market of auto insurance is a great thing for consumers. Not only does it give you a lot of choice, but it also can save you money. Here are five reasons a discount auto insurance policy might be right for you.

You Just Want the State-Required Insurance

Sometimes, discount auto policies just cover the minimum amount of liability coverage that the state requires all drivers to have. That amount is different in each state.

If you’re not sure how much insurance your state requires, click on your state on this map provided by the National Association of Insurance Commissioners. It will take you to the website for the department of insurance in your state. You’ll find the legal requirements there.

Liability insurance is usually described using three numbers. The first number tells how much bodily liability insurance you have per person if you cause an accident. This is the most the company will pay toward the other driver’s medical expenses or his passengers’ medical expenses. The second number is the maximum amount the company will pay for medical expenses per accident.

The third number describes the amount of property liability the policy has. This amount will go toward repairing the other driver’s car.

For instance, a 15/30/10 liability policy will pay $15,000 per person, with a cap of $30,000 per accident for medical expenses and up to $10,000 toward repairing or replacing the car.

It’s important to know that options and rates vary by state. Some states require more than just a liability policy.

Many states require drivers to have uninsured/ underinsured motorist coverage. This pays your expenses if the driver who caused the accident doesn’t have insurance. Occasionally, someone will not have enough insurance to cover expenses, so this policy will pay for the gap.

Some states also require you to have some sort of medical provision for you and the passengers in your car.

This can either be medical payments or personal injury protection. This is especially true in no-fault states.

For example, in Florida, a no-fault state, if you cause a crash, your liability must pay for the other driver’s car repairs. However, his own personal injury protection would cover his medical bills. If you also sustain an injury, your personal injury protection would cover your medical bills.

You Just Want a No-Frills Policy

Insurance companies offer many options these days. You need to decide how much liability you should carry, but also know whether carriers offer uninsured motorist and personal injury protection.

Also, find out whether these features are optional. In addition, consider comprehensive and collision features, which are optional if you don’t have a car payment.

Then there are things like towing coverage and coverage for a rental car if your car is in the shop. There are extras that many companies offer, like a deductible that decreases each year you go without an accident. Some companies have a program that promises not to raise your premiums after your first accident. And there are many others.

For many people, these are great options to have.

Sometimes you just want, or need, a straightforward policy without all the extras.

So-called discount policies can be cheaper because they don’t offer all these frills or extras. Still, you must qualify for these basic policies to reap their advantages.

 

If you think this is what you want, then a discount policy could be just the thing for you. Just remember to read the policy carefully. It might not cover everything you are used to.

For instance, sometimes these discount policies will not cover you if you are driving someone else’s car or if you loan your car out. Additionally, these policies might not cover you if you rent a vehicle at the airport.

Your Credit Score Isn’t Too Good

It surprises many people to learn that auto insurance companies run a credit check when determining how much their premiums should be. As the Federal Trade Commission reported, all companies use credit history to some degree.

Insurance companies and independent studies have shown that the way people handle money is a demonstration of how much risk they take in life.

People who keep debt to a minimum and pay their bills on time seem to be financially less risky than others are. Low-risk people also tend to drive in a responsible manner.

This is fine if you have a good credit score, but can cause concern if you don’t have one. If your credit score has taken a hit for any reason, but you still need auto insurance, a discount policy could be for you.

The company will still check your credit score and make adjustments, but because you aren’t paying for many of the extras of other policies, it will help keep your costs down.

You Don’t Drive Much

Although America is a highly automobile-dependent country, there are areas of the country where people rely more on walking and public transportation. There are also people who, because they work from home, are disabled, or for other reasons, just don’t drive that much.

If this is the case, and you don’t drive much, then it doesn’t always make a lot of sense to pay for a policy that covers things you don’t need.

And since you don’t drive much, your risk of being in an accident is far lower than most drivers’. However, you still have to have insurance to meet legal requirements and protect you in case of an accident.

That’s where a discount auto insurance policy can come in handy. It can provide you with the coverage you need at minimal cost.

A new type of policy sold in some states would also work well in this situation. Rather than charge a flat sum for a six-month period, customers pay a set amount per mile they actually drive.

According to the Brookings Institute, this pay-as-you-drive system would save most people an average of $270, per car and per year, on insurance.

You Want to Save Money

Probably the biggest reason people buy discount auto insurance is to save money. Insurance can be expensive, but it is a necessity to most people. They need to drive to go to work, to buy food, or do almost anything. So they have to buy insurance.

Discount policies allow you to buy minimal coverage that will provide monetary protection for minor car accidents.

Ways to Save Money on Auto Insurance

Sometimes, when people refer to a discount auto insurance policy, they are talking about the fact that the insurance company is giving them a lower rate for certain things on the policy. In this sense of the word, most people have a discounted auto insurance policy.

Insurance companies offer many discounts to all their customers eligible for them. For example, if you have gone at least three years without a traffic ticket or five years without causing an accident, you’ll probably receive a safe driver discount.

These discounts are excellent ways to save money on insurance for everyone, since no one likes overpaying for things.

There are many possible discounts. More examples are as follows:

• Good student discount: If you are a high school or college student under 25, or have one on the policy, see if his grades qualify for this one. Most companies require a 3.0 GPA, or all A’s and B’s.
• Defensive driving course: If you’ve taken a defensive driving course in the last year, you should get a discount, even if you took it to get out of a traffic ticket.
• Multi-car discount: If you have two or more vehicles on the policy, you’ll probably get a discount on each car. The more vehicles, the larger the discount.
• Multi-policy discount: This is a big discount. Always try to get your homeowners and car insurance policies from the same company if at all possible. It’s almost always cheaper this way, since the company will give you a discount on the car insurance and your home policy. Also, see if they cover boats, recreational vehicles, or campers if you have any of these.

These are just a few of the discounts available. Ask your agent or the representative from the company to go over the policy with you to see if you are getting all of the discounts possible.

If you have comprehensive and collision on your policy, it’ll save you a lot of money – as much as 40% – if you set your deductibles at $1,000 rather than $250 or $500.

This means you’ll have to pay more out of pocket if you cause an accident, but you’ll be saving more than that in premiums. Just be sure to set aside the deductible amount in an account for this purpose.

Of course, looking around for the best quote can also save you money. Each company will charge just a bit differently. So get several quotes before picking the best deal.

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