Have you purchased a new car for yourself or a family member? Inherited a vehicle that needs to be insured? Received a rate quote for a newly licensed driver? Whether adding a car to an existing policy or changing carriers, choosing your policy can be an accident waiting to happen. Many factors can influence your annual auto insurance cost. Never fear, however, as we’re here to help you navigate the rigmarole of car insurance to help you make an informed decision.
What’s With All The Numbers?
Have you ever heard your insurance carrier quickly toss out the phrases “100/300/100” or “250/500/100” coverage? Tracy Stowell of Team Trabert powered by The Rhoads Group, explains what all those numbers mean to you, the insured. All these figures refer to amounts in thousands of US dollars.
- First Number = Maximum coverage for bodily injury per person
- Second Number = Maximum coverage for bodily injury per accident. This dollar amount is divided up among all the injured people.
- Third Number = Property damage per accident
Don’t get fooled by your state’s minimum insurance requirements to save money on your premiums. In Organized Instincts’ home state of Georgia, the state minimum coverage limits $25/$50/$25. If you’re unfortunate to cause an accident, carrying just the state minimum puts you at risk of having to cover the cost of repairs or medical treatments. So, if you get caught eyeing that shiny Tesla Model 3 or sleek BMW X5 and cause an accident, you’ll be left footing the bill for costs that exceed your coverage limits. I can hear your wallet screaming Ouch!
Go Under the Hood for More Details
Our insurance expert, Tracy, pulled up the hood on auto insurance, sharing more details about understanding what drives your premium costs.
She suggested adding the Medpay option to your auto policy. This feature covers you or a passenger’s injuries when an automobile is involved. A Medpay option pays medical expenses without having to wait for reimbursement. Utilizing the Medpay option could help pay your health insurance deductible, especially valuable to those with a high-deductible health insurance plan.
She warns you to use your policy as an insurance plan, not a maintenance one, every time your auto needs a ride to the repair shop. While your policy may include towing coverage, use it sparingly. Making frequent towing claims can put you at risk of increased rates and even being dropped by a carrier for excessive claims. A more cost-effective option is using your manufacturer’s plan, like the Mercedes-Benz Roadside Assistance Plan, or using the member benefits of an automobile club member, like AAA.com, for towing.
Did you know that auto insurance follows the car, not the driver? Again, Tracy explains what that means for our readers in reality. Say you loan your best friend your ride of twenty-five years. All is well until that best friend crashes your ride, causing bodily injury and damage to the car. As the vehicle’s owner, your insurance is responsible for the claim! The moral of the story, think twice or maybe even three times before loaning out your vehicle.
Mitigating Factors May Affect Policy Costs
The good news is there are things you can do to control your insurance rates. Enrolling in driving school with a behind-the-wheel instructor hours drive can bring your rates down for a new driver. Parents can enjoy a good student discount if their licensed student has excellent grades (3.0 GPA or higher). If you don’t drive more than 10,000 miles annually, your rate could be lower due to being considered a low-risk driver.
Pricing for car insurance changes with your age. Here is a list of when to expect coverage pricing to change.
- Under age 21 – This is the most expensive age to be insured
- Age 25 – You’re considered an “adult” for auto insurance; rates go down
- Age 50 – Your best rates are at or around this age
- Age 70+ – Rates increase again, and carriers are less likely to cover or accept new drivers over the age of 80
Saving money on car insurance isn’t hard, but don’t get sideswiped by low coverage limits or unexpected coverage gaps. Don’t assume your current carrier is the best coverage you can get. Speak with an independent agent to assess your needs and review many quotes with a single phone call.
At Organized Instincts, our seasoned team of daily money managers will help your wallet avoid a collision with your auto insurance. Dodge getting T-boned by excessive car insurance rates or losing coverage by scheduling a free consultation today to discuss how we can help.