You want the best car insurance that fits your budget. However, some of the terms are confusing which might keep you from saving the most money possible.  You don’t want to end up stranded after an accident, but you also don’t want to pay an arm and a leg for coverage you don’t need.

In this post, we’ll discuss some ways to get the right coverage that can save money instead of costing you big.

Choosing the Coverage that Fits Your Needs

You want to pick a policy that will cover you in an accident, but you don’t want to pay for coverage you’ll never use.

Here are the three main types of coverage:

Liability. This type of insurance covers damages to another person and their property when you’re responsible for the accident.

It’s divided into two parts: Bodily injury and property damage. The bodily injury portion covers the other person’s medical expenses and any pain and suffering, and the property damage covers the other party’s property.

Every state except for New Hampshire requires this type of insurance, and you must purchase the minimum amount for your state. Each state has a different minimum amount, so you’ll need to examine your state’s insurance requirements.

Collision. This type of insurance covers your car when it collides with another object or when it rolls over. It doesn’t include theft, vandalism, hitting an animal, weather, or fire-related incidents.

It’s a good idea to have this coverage if your car is new, but if you have an older car, it might not be worth it. For instance, if your vehicle is worth $3,000 and  coverage costs you $600 per year, it could be worth it to save emergency money in a bank account instead. The insurance company’s total loss settlement probably wouldn’t give you the full $3,000 anyway. Plus, you’d have to pay a deductible of $250, $500, or even $1,000 to fix the car.

Examine your vehicle’s value at Kelley Blue Book to decide whether to buy collision insurance. You might find that you can save money for repairs or even buy another car rather than fork over your hard-earned cash to an insurance company.

Comprehensive. This insurance covers theft, vandalism, hitting an animal, weather, and fire-related incidents. It doesn’t cover collisions, injuries, or fatalities.

Comprehensive may be another optional insurance if your car isn’t worth much, or if you have enough money to cover incidents. However, you might decide you need comprehensive insurance if you live in a climate where weather frequently causes damage.

Check your car’s value and your circumstances to determine whether you need this insurance. You may be able to save money by electing not to have it.

Note: If you’re making auto payments to a bank or finance company, they’ll probably require you to have all three coverages. They are referred to as the lien-holder for car insurance purposes. You’ll most likely need to fulfill their insurance requirements until you own the car and your name is on the title.

Which Deductible is Best?

After you select the type of coverage, the insurance company will ask you to choose a deductible. The deductible is the amount they’ll ask you to pay when you file a claim. Your insurer will ask for this payment over the telephone before beginning any work on your case after an accident.

Insurance companies offer deductibles at $250, $500, or $1000. The lower your deductible, the higher your monthly payment, and vice versa. A high deductible will lower your monthly payment, but you’ll be expected to pay the larger sum if you have a claim.

You could save money on your insurance by selecting the larger deductible and stashing away the amount in a bank account.

Another way you can save money on insurance is by bundling insurances like auto and homeowner’s coverage with the same company. You could also save by placing multiple cars on the same policy, paying the six-month or annual fee instead of monthly installments, or by installing an anti-theft system.

Final Thoughts

Be sure to go with a reputable insurance company. Investigate their reputation through user reviews and your state’s insurance department.

Have you been looking for the right car insurance? What kind of insurance coverage do you think you’ll purchase for your vehicle?