There are 3 basic types of coverage that most are already familiar with.
This covers 3rd party damage, personal injury and death related claims. This coverage is required in almost every state as it protects both drivers who are involved in an accident.
This is the part of the coverage that repairs your car after an accident. Banks will require you to have collision if you are leasing or purchasing your car through a loan. It covers the bank from getting stuck with a damaged car if you have an accident.
This portion of your policy covers your car from theft, vandalism, floods, hurricanes, fire, natural disasters, etc. In some cases this is an unneeded added expense. If you bought your car and paid in full, or paid off your car loan, you may not need this coverage. If your car is worth less than $5000, you may want to cancel this portion of your policy.Additional Coverage:
When most drivers sign up for car insurance they believe the more coverage the better, or don’t know that there is additional coverage that they may not need.
Here are some of the additional coverage types you may be paying for but not necessarily need.
This covers any uninsured or underinsured drivers in the event of an accident. If you know you will be the only one driving your car this coverage may just be an added expense.
-Personal Injury Protection:
This coverage pays for any injury of the policy holder and passengers in the event of an accident. With most employers offering Health Insurance this may not be needed if you have a good policy. There is no need to pay for coverage that you are paying for elsewhere.
This part of your coverage pays for what it says; towing. Most towing companies have highly competitive rates and you can usually get towing for a reasonable price, so paying monthly for a service you may only use once or hopefully never, is an unnecessary expense.
-Full Tort or Limited Tort:
This allows you to lower your monthly bill by giving up your right to sue in case of an accident. Though every lawyer will tell you never give up your right to sue, if you are not keen on courts this may be a luxury you can live without.
Some policies offer this as an additional option since glass breakage is not covered under collision or comprehensive. Glass repair is fairly cheap these days and paying monthly is not worth the added expenses.
In the event of an accident, you may need a rental car. If you total your car or it is in for extensive repairs a rental car would be paid for by your insurance if you have this additional coverage. However, with the low prices of renting an economy car, this may just be a waste of money.
This additional coverage will pay the difference between the blue book value of your car and what you still owe on it in the event that you total your new car or it gets stolen. If you are leasing or purchasing the vehicle through a lender you will want this coverage. If you bought your car for $600 from your uncle’s friend, this is not worth the money.
By understanding the small fees of additional coverage and taking a close look at your policy you can save money. By canceling coverage that isn’t needed or won’t apply to your vehicle, you can turn a large monthly bill into a drop in the bucket. Talk to your insurance agent and ask what kind of coverage you have.
About the author
Marcie McDonald serves as a UK insurance consultant specializing in unique driver needs, such as temporary car insurance and even alternatives for cheap modified car insurance.