5 tips to create your perfect insurance policy

Friday, August 10, 2012

Creating your perfect insurance policy requires a bit of logic and analysis. There is no one-size-fits-all when it comes to auto insurance. Following are five insurance tips to help you select the best coverage for you. Online calculators let you adjust the coverage, giving you a revised quote for each section. Take your time and always imagine the worst-case scenario in selecting coverage from the following insurance tips.

1. Do I want higher limits of coverage than what the state requires?

Generally, the more you own, the more liability you should purchase. If an accident exceeds the policy limits, you are at fault, and you do not have enough liability coverage, your assets can be seized for any overage. This is often the least expensive premium of your entire policy, so don’t skimp in this area!

2. How much deductible should I choose?

This is one of the areas where changing your deductible will result in the most jump in premium price. Ask yourself a few questions. First, if your car is in a serious wreck tomorrow and cannot be driven without repair, decide what deductible you can come up with quickly and without problem. You should choose the highest deductible you can afford, since it is better to come out of pocket one time for a deductible if you need it, rather than pay the higher premiums every month whether you need repairs or not. If you cannot afford to come up with the higher deductible, it is better to select a lower one and pay a bit higher premium.

3. Do I need medical payments coverage?

First, find out what your state requirements are for health care insurance and uninsured or under-insured motorists. If your health care plan pays your medical bills for an accident, this coverage would be extra and you can fore-go it. Some states require this coverage regardless of your health insurance plan, so do your research and select this coverage according to your needs. Also, consider how many passengers you generally have in your vehicle, and consider having this coverage if you frequently have passengers.

4. Should I add on towing and rental?

Similar to choosing a deductible, ask yourself if your vehicle is in an accident tomorrow, if you will need it towed and a rental car while repairs are being done. Again, do the math. If you are not concerned with paying for a tow (usually a couple of hundred dollars) and renting a car on your own (usually a couple of hundred dollars for a week), or if you have coverage elsewhere (such as AAA), then you can fore-go this coverage. However, generally the amount this coverage adds to your policy more than significantly pays for itself with one incident. If you need to cut corners in your policy, but need the coverage, select the lowest coverage available.

5. What do I want for uninsured and under-insured motorist coverage?

Ask yourself what coverage you need if you were seriously injured in a car accident by someone with no or too little insurance to cover your medical expenses. This is not a place to cut corners, as most states offer fairly low premiums for coverage in this area.

Hopefully, these insurance tips will allow you to pick the perfect insurance coverage for peace of mind. Consider each tip and select coverage according to its worth in not having to worry about it down the road! With many of the policy areas, you might find that the extra $25 a year for certain areas of coverage, for example, is more than worth it!

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