4 things to know before you buy car insurance

Let’s face it: There’s a lot of stuff we learn in school that doesn’t really make it to the “useful” category when it comes to real life. And then there are things that are so much a part of life in the real world that it’s amazing there aren’t required courses, stuff like budgeting, cooking, parenting and … oh yeah, buying car insurance.

“Insurance” is word that carries a lot of confusing, frustrating baggage with it. It takes a bit of digging to get to the point where insurance offers that protection and peace of mind it’s supposed to.

So it makes sense to learn a thing or two before paying for it. Things like:

1. What kind of coverage do I need?

Usually, the only coverage you’re required by law to have is liability (which covers the other guy’s injuries, vehicle/property damage, and legal fees in a crash you caused). But when you think of everything that can happen to your car, you realize there’s so much more to think about.

• There’s collision coverage, which pays for your car whether it was your fault or not (albeit with a typically hefty deductible).
• Or maybe it’s not “car-crash” damage you’re worried about, but all the other unpredictable things in life, like fire or flood, wayward grocery carts or vandalizing punk kids, freak acts of nature or straight-up theft. It’s certainly good to know that none of this will be covered unless you get comprehensive coverage.
• You might get hurt as well, though, which makes personal injury protection something to seriously consider. You don’t get medical expenses and lost wages taken care of just when you’re driving, but even if you’re a passenger.
• There are also things like uninsured or underinsured motorist insurance that most people have never heard of, but that can be exactly what you need. This covers you if an uninsured or underinsured driver hits you. There may be a limit on what you can collect, but it’s cheaper than other coverages, and there’s no deductible.

2. Adjusting the coverage

While you’re shopping around every year or so, re-examine your needs. If your new car is no longer new, you probably don’t have the same needs. Yet your policy may still be based around a new vehicle, so maybe it’s time to adjust that collision coverage, as mentioned above. For example, if you’re $20,000 car is now only worth $3,000, then a $1,000 deductible and the payments you make for the coverage every year may not be worth it. Of course, if the car’s still a $20,000 car, then that deductible is suddenly a wonderful, beautiful thing.

3. Combining policies

This “bundle and save” idea is pretty common, but often enough it’s true. Plenty of companies will give quite a discount if you combine, for example, an auto and home policy. Spend some time looking into all the policies offered by the insurance company you’re exploring.

4. Shopping around

Sure, this is a standard bit of advice for almost anything, but this doesn’t just apply to the first time you buy insurance. You know all those ads that say “switch to us”? Well, they may be right. There is a certain comfort to staying with a company for years and years, but that loyalty doesn’t usually pay out. Consider shopping around before renewing your policy each year. You may find similar pricing and coverage elsewhere, but with a nice switching bonus.

Remember that insurance is more than a regular payment and a card you keep in your glove box. It’s something concrete that when understood, can bring you reassurance every time you leave the driveway.