Understanding Auto Insurance

Do you realize that over the course of your life time you’ll spend tens of thousands of dollars on auto insurance (and with luck will never have to use it)? But what does it all mean? What’s the difference between comprehensive and collision? What should I expect when my teen starts driving?

Well, if you’re going to part with all that money, you’d better know what you’re spending it on – here’s a primer to help you shop:

Troy Crosby, Farmer’s Insurance premiere agent in the Tidewater area, explains it this way:

Collision covers claims that arise from collisions with other cars and depends on whose fault the accident was.

Comprehensive covers the cost of vandalism, like a broken window, or road incidents like a truck throwing a stone through your window, for instance.

The term deductible applies to both of the above. Deductible is measured in dollars and equates to the amount of money that the insurance company will not cover in the event of a claim. The lower your deductible, the more expensive your monthly premium (cost of the policy). According to Troy, most folks prefer to be in the $500-1000 range for their deductible, but it’s really a personal choice.

Remember though, that as your car ages and is worth less, you can choose to eliminate both collision and comprehensive. A conversation with your agent will clarify things when that time comes.

Finally, Bodily Injury (BI) and Property Damage insurance covers damages when your vehicle harms another person or their property. You should at least have BI coverage equal to double your assets, and property damage insurance should start at $50,000.

And, as for covering teens, the basic rule is to keep them from driving as long as possible, ensure they study hard to earn the good student discount, and have them shoulder some of the insurance costs to give them a sense of ownership. The cost of insuring teens can cause your premium to skyrocket, so fashion (and stick to) a strategy that minimizes your financial pain.

Comments

[geosseSop]

You write very well.