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From cavemen to geckos, youÌýhaveÌýprobably seen dozens of ads forÌýauto insurance, but do you know what toÌýconsider when buying a policy? It’s important to understand whatÌýyour insurance will coverÌýand how to protect yourself.ÌýÌý

TOP CONSIDERATIONSÌý

WhoÌýneedsÌýautoÌýinsurance?ÌýEveryoneÌýwho owns a car should purchase autoÌýinsuranceÌýsoÌýthey are covered for property damage, medical bills,ÌýandÌýlegal costs.ÌýMost statesÌýrequire the owner of a vehicle to purchase insurance or provide proof of financial responsibility.ÌýÌý

Components of an auto policy:ÌýIt’s important to understandÌýyourÌýpolicy.Ìý

• Declarations/information pageÌýincludes all information about your policyÌýsuch asÌýtheÌýpolicy number,Ìýeffective dates, the carsÌýcovered,Ìýany loans, coverages,ÌýlimitsÌýand deductibles,ÌýyourÌýpremium, risks and discounts,Ìýas well asÌýcontact details for your company and agent.Ìý

• Personal auto policy or policy formÌýfeaturesÌýspecificsÌýaboutÌýwhat is covered, the conditions of the policy and any exclusions.ÌýÌý

Coverage options for your car:ÌýWhen it comes to protecting your own vehicle and occupants, here areÌýsomeÌýbasics.ÌýÌýÌý

• CollisionÌýcoverageÌýpays for physical damage to your car as a result of your auto colliding with an object, such as another car or a tree.ÌýÌý

• ComprehensiveÌýcoverageÌýpays for damage to your auto from almost all other losses other thanÌýcollision. TheseÌýmay includeÌýtheft, fire, vandalism,Ìýfalling objectsÌýor animal damage.Ìý

• OptionalÌýcoveragesÌýinclude anything from rental car coverage to towing services. AAA or other memberships mayÌýalready include some of these coverages.Ìý

• Medical Payment Coverage (MPC)Ìýpays for the medical and/orÌýfuneral expenses for you or others injured or killed in an accident while riding in or driving your automobile. This coverage also often extends toÌýpedestrians.ÌýÌý

• Rental reimbursement coverage or transportation expensesÌýpaysÌýfor a rental car if your vehicle is damaged by a covered loss. This coverage is usually purchased with a daily and total maximum. For example, $20 per day up to a total of $600.ÌýÌý

• Towing orÌýemergencyÌýroadÌýservice coverageÌýpays the cost of towing your car to a repair shop.ÌýÌý

Liability coverage:ÌýMost policies contain three major partsÌýrelated to liability to other vehicles and people.ÌýÌý

• Bodily injury liability insuranceÌýdoes not protect you or your car directly. If you cause an accident in which other people are injured due to your negligence, this insurance protects you against their claims for damages.Ìý

• Property damage liability insuranceÌýpays for any damage you cause to the property of others,ÌýlikeÌýanother vehicle, fence, or tree caused by a collision.ÌýÌý

• Uninsured motorist coverageÌýprovides coverage for injury or property damageÌýif you are injured by a hit-and-run driver or a driver who does not have auto liability insurance.ÌýÌý

No-fault states:ÌýIf you live in a state that has no-fault laws – meaning there is no need to determine who is at fault to receive payment for injury claims – partiesÌýseek recovery fromÌýtheirÌýown insurersÌýinstead of bringing a lawsuit.ÌýThe two types of coverage provided under a no-fault system are:Ìý

• Personal Injury Protection (PIP) coverageÌýpaysÌýyouÌýor othersÌýriding in your car for injury regardless of fault.ÌýBenefits varyÌýamong states, butÌýtypically includes medical expenses,ÌýlostÌýwages,Ìýand funeral expenses.ÌýÌý

• Residual Bodily Injury Liability CoverageÌýprotectsÌýyour family and anyone elseÌýin your car in the event you are sued because of injuries caused to others.ÌýBased on certain thresholdsÌýsuch asÌýclearly defined injuries or death, a suit could still be filed.ÌýÌý

Determine your deductible:ÌýA deductible is the amount of money you agree to pay prior to the insurance company making any payment on a loss. Typical deductible amounts are $250, $500ÌýandÌý$1000.ÌýGenerally, the higher the deductible, the lower the policy premium.Ìý

Shopping for auto insurance online:ÌýItÌýcan be confusingÌýto shop for insurance online.ÌýDependingÌýyourÌýstate, it may not be easy to get online quotes. Some websites will send the information to an agent in your area to quote and write the policy. Not all websites provide immediate quotes. In some cases, a company representative will call to confirm the information before providing a rate. In this case ask to have the information emailedÌýforÌýyour records. When shopping online,Ìýkeep in mind:Ìý

• AllÌýquotesÌýmayÌýnot have matching coverages/limits—if so,Ìýcontact the companies and ask for a revised estimate using matching coverages/limits.Ìý

• Some websites are authorized to make coverage available immediately, while others cannot, even if you have made a premium payment.Ìý

• Once you have made a payment for the policy, you should have access to a temporary identification card to keep in your car. Permanent cards and a copy of the policy should come in the mail within 60 days.ÌýÌý

Information to disclose to the insurer:Ìý

• Drivers/Operators.ÌýInclude all drivers. If you fail to include household drivers and they are behind the wheel in an accident, the company could cancel,Ìýdecide not to renewÌýyourÌýcoverage or charge additional premiums.ÌýIf you driveÌýcommercially, such asÌýfor a ride-sharingÌýservice, you should disclose this to your insurer to make sure you are properly covered.ÌýÌý

• Driving Record.ÌýGenerally, insurance companies ask for three years of driving history and will use a Motor Vehicle Report (MVR) to check the driving records of all named drivers. Some companies rate your premium by measuring at-fault accidents and traffic violations (often called risk classification factors). Check all quotes for discounts or surcharges based on driving history and risk classification factors.ÌýÌý

• Credit Rating.ÌýIn most states it is legal for insurers to use credit-based insurance scores as a risk classification factor in pricing a policy. Review your credit reports for errors before getting a quote.Ìý

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HOW TO PROTECT YOURSELFÌýÌý

DoÌýyour research:ÌýThe lowest quote may not always be the best choice. Before making a payment, doÌýyourÌýhomework.ÌýTalk with friends and familyÌýabout their auto insurance experiences.ÌýCheck with yourÌýstate insurance departmentÌýto verify that the company and agent (if you are dealing with one) are licensed in your state. You should also inquire about complaints made against the company.ÌýÌý

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Carefully review the information on the declaration page:Ìý

• Personal Information.ÌýVerifyÌýall informationÌýon the policy is correct. Parking your car in a garage, or even parking it off the street can mean lower premiums.ÌýÌý

• Year, Make, Model, Vehicle Identification Number (VIN).ÌýHow much you pay is based on the car you drive,Ìýso make sure this information is accurate.ÌýIf not,Ìýit could cause problems if you file a claim.ÌýÌý

• Lienholder Information.ÌýIf you obtained a loan to purchase your car, the lienholderÌýshouldÌýbeÌýlisted on the policy. If you have paid off the loan, call to have the lienholder removed.ÌýÌý

• Collision.ÌýThe higher your deductible, the lower your premium.ÌýSince this is the amount youÌýhave toÌýpay if the car is damaged in an accident, make sure you will be comfortable paying the amount.Ìý

• Comprehensive.ÌýIt is possible that removing the comprehensive and/or collision coverage from a policy could save some money. Before you decide to cancel comprehensive coverage weigh the value of the car and the cost to replace or repair it against what you would save.ÌýÌý

• Discounts.ÌýCheck the list of discounts to see whatÌýisÌýincluded in your overall premium.Ìý

THREE THINGS TO REMEMBERÌý

1. ResearchÌýthe types of coverage offered and what is required in your state.ÌýÌý

2. Regularly review your auto policy andÌýmake any updates when your circumstances change.Ìý

3. Weigh premium vs. deductible to make the right financial decisions for the coverage you need.ÌýÌýÌýÌý