When shopping for auto insurance, the lowest price isn’t always the best value. A truly “cheap” policy is one that provides the coverage you need at an affordable price. To find this balance, it’s crucial to understand the different components of your auto insurance policy.
The core of your policy consists of liability coverage, which is legally required in most places and covers damages to others if you’re at fault in an accident. This is broken down into bodily injury liability and property damage liability. While you can opt for the minimum required coverage to save money, a serious accident could easily exceed these limits, leaving you personally responsible for the remaining costs.
For your own vehicle, you’ll need to consider collision and comprehensive coverage. Collision coverage pays for repairs to your car after an accident, regardless of who is at fault. Comprehensive coverage protects against non-collision events like theft, vandalism, and natural disasters. If you have an older car with a low market value, you might consider dropping these coverages to save on your premium.
Your deductible—the amount you pay out-of-pocket before your insurance kicks in—also plays a significant role in your premium. A higher deductible will result in a lower premium, but make sure you choose an amount you can comfortably afford in the event of a claim.
By carefully considering your coverage needs and adjusting your policy accordingly, you can find a plan that is both affordable and provides adequate protection.