Shopping for car insurance

Insurance is just as essential as the tires on your car. And like a car, there are many different costs involved based on your personal situation and the vehicle you choose to drive.

Therefore, although insurance is something that many consumers overlook when leasing a car, it is something that you, the educated consumer, need to consider!

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Different insurance companies target particular types of customers to offer their best rates. Various types of customer-specific characteristics include: state, age, gender, previous driving record, good student, type of car, year of car, color of car, classification of car (sport, economic), engine type, number of doors and more. All of these factors contribute to the amount that you will pay for insurance. By randomly picking an insurance plan, you may not select a company that focuses on your particular characteristics, and therefore, you will end up paying premium rates. Typical yearly rates can average anywhere from $600 per year to $3,000 (or more) per year, which breaks down to the difference between $50 and $250+ a month. Do not throw your money away because you did not spend a few extra minutes researching the best insurance plan for you.

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The first question that you need to ask is to know how much insurance you actually need. Before even considering what you would want covered, you need to know what your state legally requires you to cover. This will be the bare minimum level of insurance that you should purchase (which is a popular choice when selecting insurance plans). Most states require liability insurance. This saves you from handing over a huge multi-thousand or even million dollar payment when you are at fault in an accident.

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Another important component of insurance is Personal Injury Protection (PIP), or Medical Payments (MedPay). PIP or MedPay pays for your own medical expenses, any lost wages and whatever other costs may arise when you are injured in an accident. It usually pays 70 - 85% of your losses, and it also pays a death benefit. PIP is required in Colorado, Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon and Utah.

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Now that you know the bare-bones amounts that you need in order to keep yourself safe, it is a good idea to purchase above the minimum limits. As the saying goes, you get what you pay for, and while you may cover injury liability, if someone else is injured and you are at fault, the minimum liability coverage may not cover their medical expenses. If this happens, it is likely that you will have to pay for their medical costs.

Overall, insurance companies generally recommend that you purchase $100,000/300,000 limits of bodily injury liability. If your personal assets are not that much, ( i.e. you do not own a home or car and do not have much savings), then you do not have many assets to go after and the minimum requirements might actually be the best choice for you, which may also give you a little bit more cash to try to start saving.

On the other hand, if you have significant assets that could be at risk, purchasing a little extra insurance will create some peace of mind that could pay off huge dividends in the event of an accident.

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Aside from bodily injury liability, personal injury protection, property damage liability and uninsured/underinsured motorist coverage, there is also collision and comprehensive auto insurance coverage that insurance companies encourage you to purchase. Collision covers damage to the policyholder's car resulting from running into anything (remember that pole you didn't see?) and comprehensive coverage takes care of your car in the case of theft, fire, falling objects, explosions, earthquakes, floods, riots, civil commotion, and other related events.

Comprehensive and collision coverage are required on most leases, and are absolutely necessary if you own an expensive car. If you are driving a "beater", you may end up paying more for your premium and coverage than the value of your car. Make sure you do the numbers to figure out if this is a good choice for you.

Before selecting the right insurance coverage, you should also consider what is covered for you under other insurances, such as medical and dental.

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The more citations, tickets and accidents that you have, the higher your premium will be. Typically, an insurance company bases your premium on what they expect to have to pay for your future driving habits. If you have proven yourself as a great driver who avoids accidents and speeding, they will give you a break. You do not want to pay for the same coverage twice, so make sure you read up on your current policies. If you tend to be "accident prone" and are racking up points on your license, you can expect to pay a premium on your insurance.

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Check out your current policy. If you have ever been in an accident, did it provide enough to keep you out of the red? Did you wish you had more? Are your payments taxing you each month? Keep these things in mind and choose wiser as you select your next policy.

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So now you have researched all of your options and feel good about the price you are going to pay (as good as you can!) and the company that you are working with. So what is stopping you from signing on that dotted line?

Make sure that you review everything in your policy.

It is easy for insurance companies to accidentally leave something out or add something in that will ultimately cost you more money.

Make sure you understand every sentence in the contract, and if you do not, then do not hesitate to ask for an explanation. If it seems fishy, keep looking. You have plenty of suitors.

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