When it comes to purchasing insurance for your vehicle, it may feel as if you're continually making decisions about cost vs. coverage. Should you try to save some money on your monthly budget, or should you go all-in on a complete policy? Do you need collision and comprehensive, or do the higher premiums outweigh the risk of damage from an accident?
These decisions can seem insurmountable, but you don't always have to decide between a high level of protection and affordable monthly bills. While you'll always need to make some trade-offs, you can often develop a best-of-all-worlds policy when choosing insurance coverage. These three tips will help you get affordable insurance without exposing yourself to unnecessary financial risk.
1. Don't Rely On One-Size-Fits-All Advice
Auto insurance is a surprisingly personal decision. The best coverage for one person might not be the best coverage for another. If you drive a newer vehicle and you're financing it through a bank, you'll probably need to carry additional coverage, including collision or comprehensive.
On the other hand, you'll have more freedom if you own your car outright. In these cases, consider the overall value of your vehicle and your willingness to live with minor cosmetic damage. If you're okay with a few bumps and scratches, a high deductible policy can save you some money. These policies won't help much with minor fender benders, but they'll get you back on the road after a major collision.
2. Always Shop Around
Premiums can also vary significantly between individuals. Insurance company actuarial tables take a vast number of factors into account, and not every company weights these factors in the same way. Your close friend may have gotten a fantastic rate from one company, but the same company might not be the best option for you.
If you're in the market for insurance, always shop around. Comparing rates from a few companies can help you establish a likely range for your premiums, which can help you make a more informed choice. You're also more likely to find a company that can provide you the coverage you want at a price you can afford.
3. Consider Your Risks
In many cases, the battle between cost and coverage is an illusion. When choosing your policy limits, consider your actual risks. How expensive is your car to repair? You may find that the cost of your monthly premium is relatively small compared to the financial risks you'll face in a significant accident.
By having a clear picture of your risks, you can better understand the actual cost vs. coverage decision that you need to make. Once you have this information, you'll be better equipped to find the perfect balance for your insurance policy.