If you own or lease a vehicle, almost every state requires you to have some amount of auto insurance. Even if you drive, but don’t own a vehicle, you should probably have a non-owners auto policy, but that’s for another time.
Problem is, auto insurance can be expensive and confusing. Fortunately, there are insider tricks to staying compliant and safe, while cutting costs. In this episode, I’ll cover 7 ways to reduce the cost of auto insurance without jeopardizing your financial security.
7 Tricks to Save Money on Auto Insurance
- Don’t pay for what you don’t need.
- Get familiar with potential discounts.
- Consider pay-as-you-drive programs.
- Increase your deductible.
- Bundle policies with the same insurer.
- Maintain good credit.
- Shop your policy regularly.
What Does Auto Insurance Cover?
Before covering each of these tips and tricks, here’s a brief explainer on auto insurance and why it's so important to your financial well-being.
Auto insurance is a package of policies that protect you against financial loss in three main ways:
1. Liability protection pays for legal obligations as a result of a lawsuit. This is mandatory in most states, but the minimum amount you must carry varies significantly depending on where you live.
2. Medical protection pays for the cost of injuries to you or your passengers due to an accident. It can cover a variety of expenses, such as medical treatment, lost wages, and funeral expenses. Many states require medical coverage called personal injury protection (PIP).
3. Property protections are optional coverages that reimburse you for damage caused by you, others, or Mother Nature. You can purchase comprehensive coverage for damage that isn’t the result of an accident with another vehicle, such as storm damage or theft. Collision coverage pays for damage due to an accident with another vehicle. Both comprehensive and collision come with a deductible, which is an amount you must pay before a claim is paid.
There are additional optional coverages that most policies offer, such as:
- Uninsured or underinsured motorist pays when you’re involved in a hit-and-run situation or an at-fault driver doesn't have enough auto insurance to cover your loss.
- Rental car reimbursement pays for you to drive a rental while covered repairs are made to your vehicle.
- Glass replacement repairs or replaces your...
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