By increasing your deductible, you’re essentially saying that you’ll pay more whenever an insurance claim is filed. An insurance deductible is the amount of money that you’ll pay toward a claim prior to the insurance money starting to pay, thus, the higher your deductible, the less liability the insurance company carries, which in turn will lower your monthly premium.

Just as with car insurance, increasing your deductible from $500 to $1,000 could actually decrease your monthly premium insurance payment by up to 25%. Before adjusting your deductible, you’ll want to consider the pros and cons, as well as talk to your insurance agent to see if its the right move for you. If you live in an area that has common disasters – floods in the east, ice storms in the northeast, tornadoes in the midwest, earthquakes in California, etc. then increasing your deductible might not be the best idea, unless you’re comfortable covering the extra amount. In each of these disaster prone areas, you will most likely have a separate deductible for each type of disaster, so again, check with your insurance agent.

When shopping for car insurance or automobile insurance, there are typically three main areas of coverage that you want to consider prior to selecting a policy. Within each area of coverage, you’ll need to decide the amount of coverage that you want. Below, I’ve outlined the three main areas of coverage, two of which are required and included with every insurance policy, and the final will be additional/optional coverage that can be added onto your auto insurance policy.

Liability and Medical Coverage

Liability Coverage
If you are at fault in an accident that is covered by your policy, and others (people or property) are injured or damaged, liability coverage will help to protect you from the cost of these damages. Without insurance, and more specifically liability coverage, the entire cost of damages from an automobile accident could become your financial responsibility.

Medical Payments Coverage
If you’re involved in an accident, the medical payments coverage option will help pay for necessary medical bills. It’s always a good idea to have a high amount of medical payments coverage on your car insurance policy.

Underinsured / Uninsured Motorist Coverage
If a driver with little or no insurance damages your car, or injures you or someone riding with you, the uninsured motorist coverage option can help cover repairs and expenses. Though its always a good idea to have uninsured motorist coverage, the amount of coverage that you need will often depend on the area that you live, the type of car that you drive, the amount of driving that you do and the areas that you typically drive your car. If you live in the suburbs in a nice neighborhood and don’t leave often, you won’t have a very high need for uninsured motorist coverage, however if you live in the city and drive through poor parts of town, uninsured motorist coverage would be a good idea for you. (Underinsured/uninsured motorist coverage is often subject to certain limitations, however, so check your individual policy, or talk to your agent for more details.)

Vehicle and Property Protection

Collision Coverage
This option helps protect you from repair costs to your car if you’re involved in a covered accident. Considering it’s a covered loss (that’s insurance-speak for an accident that’s specifically covered by your policy), Collision coverage helps pay for the repairs needed to get your car back on the road. Keep in mind that if you are not at fault in the accident, the repairs will typically be paid by the at fault party’s insurance (unless the at fault party is uninsured – that is where uninsured motorist coverage comes in handy).

Comprehensive Coverage
This option helps protect your car in situations that do not necessarily involve other drivers or vehicles. If your car is damaged by a storm, vandalism, or “passive object” (such as a tree or a post in a parking garage) which fell and was not caused by collision or some other freak accident, comprehensive coverage will save you. I wish I had higher comprehensive coverage and lower deductible when my car was broken into last year.

Additional Protection (Optional Coverage Options)

Personal Injury Protection
Some insurance companies will offer coverage that will help to reimburse you for lost income, child care expenses, medical expenses, and other similar things if you’re hurt in a covered accident. Personal Injury protection is not available in some states, and not available through all insurance providers. The amount of reimbursement is typically based on the coverage that is purchased in your policy.

Additional Coverage Options
Additional coverage options offered by auto insurance companies can include, but are not limited to:

• Towing Cost Coverage
• Repair Cost Coverage
• Rental Car Cost Coverage
• Rental Car Reimbursement
• Sound System Coverage
• Car Contents Coverage

These additional coverage options might be included through some insurance companies policies, and sometimes will have to be added on separately.

All of these options and optional items should be considered when you are looking to purchase new auto insurance policy.

When shopping for a new car insurance policy, there are many factors that should be considered before deciding on the plan, policy and company that you choose to insure your automobile with. The first, and best piece of information that I can give you is to get out and shop around for insurance prior to choosing a new policy, don’t just go with the first one that you see – even if it does sound like a good deal.

Insurance Companies

When I shop for automobile insurance, the first place I start is with the company. I begin by choosing three to five companies who I would trust. If you are in a hurry to find car insurance and three to 5 companies is too much for you to research, make sure you find at least two or three to compare. Here are some questions that I ask myself when choosing a car insurance company:

1. Is this company reputable?
2. How long has the company been in business?
3. Is the company financially stable?
4. Do I trust this company to insure myself, my family and my property?

Once you’ve found three to five companies that you’ll consider doing business with, you’ll want to compare those companies against each other to see if any of them stand out among the rest as being much better or much worse.

Company History and Strength

Once you’ve selected a few companies, you want to learn as much about the company as possible to make sure that company will be there when you need them most – when you get into an accident, when your car is broken into or worse, stolen. Some questions that I ask when I am researching the history and strength of individual companies are:

1. How long has this company been in business? (Again)
2. How many employees does this company have?
3. How does the balance sheet for this company look?

When considering the above questions, compare the answers for each company against each of the others. If they’re better for any reason, you’ll probably want to consider using them more heavily, and likewise, if they’re worse for any reason, you may want to remove them from the list prior to moving to the next step.

Price, Premiums and Deductibles

Once you’ve got a good idea of the reputability and reliability of your selected insurance companies, you’ll want to consider the price for the insurance premium at each of the different companies. To determine the price for your new policy, you’ll first want to determine the Car Insurance Coverage Options that you’ll need, such as coverage limits on bodily injury, property damage, and deductible amount. A standard place to start is $100K/$300K (bodily/property) and a $500 deductible. If you’re very accident prone, you may want to get quoted on a lower deductible or if you’re a very safe driver and have never had a problem you may want to consider a higher deductible like $1,000 as this will lower your monthly premium. Anyways, once you decide the coverage options that you want and need, call the insurance companies and ask for quotes directly – Do not call an insurance broker, as they act as a middleman and that will increase your price for car insurance. Compare all the prices that you are given and then make a knowledgable decision based on everything that you’ve learned about each insurance company and the pricing that they offer you. Note: if two or more of the companies offer you pricing that is very close to the other, you may want to ask each about Car Insurance Discount and Incentive Plans that they may offer.