11 Things to Know Before Buying Auto Insurance

Like death and taxes, auto insurance is one of those things we just can't avoid -- at least not legally. Nearly every state requires motorists to carry at least liability insurance, and in most cases, you'll want more. Servicemembers have special insurance needs, ranging from vehicles that must be stored while the owner is away on active duty, to vehicles originally registered and insured in one state and then taken to another state for service orders. Be sure you understand how to stay within the law and get the best coverage when you're insuring your vehicle. 

1.)Plan when you buy. Think about insurance before you choose your next vehicle. You will save right out of the gate if you opt for a car without a lot of bells and whistles. Also consider which cars are stolen most frequently. Check a recent list -- the insurers do, and they charge more to cover those models. 

2.) Tune up your credit score. Pay bills on time and pay overdue debts. In addition to driving record, use of vehicle, area of residence and other factors, insurers do take credit scores into account when determining rates.

3.) Compare rates. Many servicemembers swear by military-oriented financial companies for the best rates. Definitely check them out, but also do your homework by checking rates for your vehicle with other companies to be sure you get the best benefit for the best price.

4.)Know special military rules. Members of the military often have special rules when it comes to car insurance. Many states allow servicemembers to continue registration and insurance coverage from their home states, no matter where they are stationed. But if a servicemember or spouse is employed in the new state, the vehicle might have to be registered and insured there. Check state rules to be sure. 

5.)Check into deployment options. If you're going to be deployed, ask your insurance agent how you should handle your auto insurance coverage. Many insurers will now waive penalties if you choose to drop coverage while you serve your country. Others will encourage that you retain a low level of coverage on a stored or inactive vehicle.

6.) Know insurance terms. Before you can complete the mission of choosing the right insurance, you have to speak the language. Key terminology includes:

• Liability coverage: Covers damage to property or human injury if you are at fault. It also pays court costs. 
• Collision coverage: Insures your own vehicle against damage from an accident. Usually not cost-effective on older, less expensive cars.
• Comprehensive coverage: Covers damage to your vehicle from something other than an accident. Again, owners of older, less expensive cars usually drop this coverage.
• Medical coverage: Pays medical expenses from an accident. Compare with what is available under your health insurance policy. If you do not have health insurance, definitely opt for appropriate medical insurance on your auto policy.
• Uninsured/underinsured motorist: Pays for damage to your car if you are in an accident caused by someone who does not have insurance (or who does not have enough insurance). 

7.) Consider gap coverage for new cars: Gap insurance covers the "gap" between the value of your car and the amount you owe on a car loan. It can give you peace of mind when your vehicle has depreciated in value, but you have not paid the loan down yet. In this situation, if you totaled your car, an insurance reimbursement might be less than you owe the bank. Remove this coverage when the loan falls below the vehicle?s value.

8.)Think carefully about other coverage: You can add policy coverage for rental car or roadside assistance (tow or help for flat tires or other problems). Do not duplicate benefits, such as roadside assistance covered by an auto club membership.

9.)Choose the right deductible: The deductible is the cost you must pay for repairs before your insurer pays its portion. Choose the highest deductible you could afford in the event of an accident. The higher the deductible, the lower the premium. Then put whatever money saved by opting for a higher deductible cost in an interest-earning account. By choosing a deductible of $500 instead of $200 on collision coverage, a car owner can save up to 30 percent on premiums. 

10.) Discounts: Ask about discounts. You might be eligible for discounts because of your age (such as over 50), driver training, car features (air bags, alarm, antilock brakes), or having more than one policy with the insurer. 

Insurance may be a necessary evil, but the right policy will keep you law-abiding, protect your assets from loss in the event of an accident, offer smart financial choices -- and provide peace of mind.

Things to know Before Doing Car Insurance

When it comes to picking car insurance, sometimes it's just easiest to go with what your friends use, or the company whose commercial you've seen the most on TV lately. But that's probably not the best idea. Like any business, insurance companies all have different rates, plus they can vary greatly in everything from their coverage to their office hours to the speed of their claims service. So, shopping around is essential to getting a good deal, and the proper coverage and service for you. But don't walk into the process blindly. You have to know what questions to ask when you're shopping around, because not every agent you speak with will give you in-depth info on their coverage and all of your options. The good ones will do that, but the not-so-good agents will only cover the basics. It's up to you to ask a wide range of questions so you can truly compare plans.
If you're like most people, though, you're not an expert and don't even know what you need to know about insurance (how's that for confusing?). Keeping the following list of 10 questions close by can keep you on track while researching insurance companies and will help you choose the policy that's right for you.

For starters, you have to purchase any coverage mandated by your state. Most states only require liability insurance, which covers the costs of anyone who's injured or dies as a result of a car crash you caused, plus damage to their vehicle, any property damage and legal fees. But consider these additional types of coverage as well:

• Collision. This covers repairs to your car after an accident, no matter whose fault it was. You generally have to pony up for the deductible, which is a set amount of money you agreed to pay before the insurance company kicks in the remainder. Collision coverage is important -- but only if your car is newer. Let's say you have an older car worth $3,000 and collision coverage that costs $200 per year with a $1,000 deductible. If your car gets totaled, you'd collect $2,000 after paying the $1,000 deductible. That's not a great payback. But if you have a newer car worth $30,000, you'd collect $29,000 after paying the $1,000 deductible. That's more like it!
• Comprehensive. Comprehensive pays for damage to your vehicle from non-crash incidents, such as fire, vandalism, acts of nature and theft. This coverage normally carries a deductible, too. As with collision coverage, whether or not it's wise to purchase comprehensive depends on the value of your car; you can find out what that value is by looking at an online guide such as the NADA Guides at www.nadaguides.com. Check your vehicle's value every year and re-evaluate your collision and comprehensive coverage [source: Zeman].
• Uninsured and underinsured motorist protection. Also called UM and UIM, these coverages may be required by your state. Less expensive than collision and comprehensive, UM and UIM cover the costs of car repairs if an uninsured or underinsured driver hits you. There's no deductible, but there's also typically a limit on how much you'll be able to collect -- generally about $3,500 [source: Zeman].
• Personal injury protection. This coverage pays for medical expenses and lost wages to you or your passengers if someone hits you. If you're injured while riding in someone else's car, it will also cover those medical bills. This is pretty important coverage to carry, although if you're healthy and have a disability policy, you can opt for the minimum coverage