Having the Right Amount of Auto Insurance Coverage

There are two kinds of insurance: personal insurance and auto insurance. Personal insurance is meant to protect you from the financial impact of an injury, sickness, or loss due to theft or fire. Auto coverage is there to protect you if someone hits your car or has a claim against it. This article will briefly explain both types of coverage and how they work together so that you can make sure you have the right amount for your needs.

The first thing that should be taken into account before deciding on auto coverage is how much money your vehicle typically makes on a monthly basis. This is important because the amount of coverage you need to insure your car depends on how much it costs to replace it with a similar vehicle if the worst were to happen.

Your insurance agent can help you figure out what your monthly income is from your vehicle. If you are driving a beater worth $2,000, that probably makes about $200 per month in gross income. If someone were to hit that car, the cost of replacing it would be $2,000. That means that you would have to pay $200 for one month plus $2,000 if something happened. That's probably too much of a risk. The fact that you could only afford to insure a car worth $2,000 in the first place means that if the worst happened, you wouldn't have enough money for a decent replacement.

If you have an old car that doesn't produce much income for you, then your risk would be much lower and insurance coverage could be far cheaper. You'd just need enough coverage to replace your vehicle with a newer model of the same make and model. This would leave some money available to fix it later on should something else fail.

The cost of installing car insurance also plays a major role in your final decision, because it has to cover the full cost of repairs if something were to happen. The actual replacement value depends on how old the car is. If it's four years old and paid off, then it's likely that it would be worth $2,000 when you have the money for a new one. That means that any repairs your insurance covers will be $2,000 for each month they last. Insurance renewal rates are different depending on your state because there are many factors that affect them. In general, though, they cost between one and four cents per month.

By taking these two factors into consideration when deciding on your car insurance coverage, you can buy the right amount of coverage for your needs. The only thing is that you need to do your research before buying it. The insurance companies just want to sell you the most expensive coverage, so make sure you aren't getting ripped off or taken advantage of by them. The best way to do that is simply by asking them what the average loss for a vehicle from their area is year after year.

This article was written by Stephen Lagergren from Money-Tips.com . This article was originally published in May 11, 2011 and updated with new information.

Next page: Auto Insurance Comparison Charts and FAQs...

Title: Auto Insurance Comparison Charts and FAQs

 ARTICLE SUMMARY -  This article will review auto insurance rates comparison charts that can help you save money on your auto insurance. It also covers frequently asked questions related to comparing auto insurance quotes such as how much of a difference they make, how to find the best rates, how to avoid higher premiums by using non-driving factors like marital status, when you should change your insurance company or policy type, etc. This is part 1 of a 3 part series on finding the best rate for auto insurance. You can read part 2 here:   How to Get the Best Auto Insurance Rates Part 2 and part 3 here:   How to Get the Best Auto Insurance Rates Part 3 .

Why You Need to Compare Auto Insurance Quotes

Auto insurance rates vary greatly and a major factor in how much you pay is whether or not you comparison shop for auto insurance. Typically, if you are paying more than $200 per month for your auto insurance, then it is worth comparing rates. If you are paying less than $150 per month, then comparison shopping probably isn't worth your time.

Below are some of the most common questions that people have. If you have more questions, just post them in the comments section below.

What is the average cost to insure a car? How much does a car insurance quote depend on driving record? What percentage of decrease in premium does it take for me to consider changing auto insurance companies? How long does an auto insurance renewal quote typically last? Is it better to go for group coverage than individual coverage because of insurance pricing calculations? What are my options if I want increased coverage?

Cost to Insure Your Car Compared To Average Income

As explained above, the main determinant in whether or not auto insurance rates are economical is how much money you make. The only reason you would pay less than $150 per month for auto insurance is if the value of your car was less than $3,000. If this is the case, then ask yourself why you have a car that costs more to insure than to replace.

If your auto insurance premium is above $50 per month and your car is worth more than $3,000 on average, then it's time to look for better rates. Start by using an online rate comparison tool. The following charts show the average costs of insuring cars in various states and also show the amount of money that car owners make in each state as well as what their average cost to insure a vehicle (per month) is likely going to be.

This information comes directly from the Insurance Information Institute.

What Percentage of Decrease in Premium Should I Expect?

Most insurance companies will give you a discount for adding an anti-theft device like an alarm or immobilizer, but you won't get much of a discount for them. As with most things, it's all about negotiating. If you can get a better deal at one company than another, then it's usually worth switching to the other company. If you aren't getting good rates from your current insurance company, then try calling some local agents and seeing if they will give you a better rate than what the insurance company is offering you.

A good rule of thumb is to deduct about 5% from the auto insurance rate you are getting. If this results in a better rate, then it is worth switching companies. A lot of times the insurance company will work with you on a price that isn't necessarily the cheapest possible price, and if they don't, then there's no point in remaining with them.

Should I Switch My Auto Insurance Company?

No, unless you're getting a very bad rate and/or you have had some problems with your current company in the past (for instance, they were recently involved in a scam or something), then it's not necessary to switch ​companies.

Conclusion

The standard auto insurance premium costs vary greatly depending on the state you are in, but I was able to find some good auto insurance comparison charts that will help you save a lot of money if you drive a lot and live in a high risk area or if your car is more expensive to replace.

You can get more information by reading my article entitled:   How to Get the Best Auto Insurance Rates Part 2 and 3 .

This article was written by Stephen Lagergren from Money-Tips.com . This article was originally published in February 7, 2011 and updated with new information.

Next page: Auto Insurance Comparison Charts and FAQs...