Buying Auto Insurance
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Almost three years ago, my car a Honda City 2003 model collided against a bus. Good thing I was not hurt badly during the accident, but my second hand car was a mess. Not anticipating that I would encounter such problem, I didn’t buy any insurance. Here in the Philippines, you can actually drive your car even without having a car insurance. It’s not really expensive, I’m just too lazy at that time to purchase one. A very costly mistake I should say!
Have said that, I thought it would be reasonable if car owners should buy insurance as soon as they start driving their car. However, auto insurance premiums will continue to soar along with the costs of lawsuits, medical care, and car repairs. That’s why it’s crucial to become a smart auto insurance shopper. Annual premiums in big cities such as New York and Los Angeles often climb into the thousands of dollars, especially if you are under 25, own more than one car, or have a teenager in the house.
To find a suitable, affordable auto policy, first decide what level of coverage you want. Car insurance comes in a package that consists of the following provisions:
• Liability protection. Like homeowners insurance, auto insurance protects you against liability. Here, the coverage protects you against claims for injury and property damage brought by other drivers, pedestrians, or property owners who allege that you caused the accident. Your auto insurer will defend you in or out of court against any claims. The insurance company pays the legal expenses and, if necessary, the damages, up to the dollar limit specified in your policy.
Most policies have three separate dollar limits for each of the following: (1) each person injured in an accident; (2) all people injured in the same accident; and (3) property damage, typically damage to the other driver’s car. Most states require drivers to take a minimum of between $20,000 and $30,000 of coverage per person in an accident, with a cap of between $40,000 and $60,000 per accident. (This gets complicated; hang in there).
A typical bare-bones policy covers $25,000 of liability per person, $50,000 per accident, and $10,000 for property damage; the shorthand name for the insurance would be 25/50/10 coverage. But that’s not enough coverage for most people. Unless you have virtually no assets, be sure to purchase at least $100,000 of liability per person, $300,000 per accident, and $100,000 for property damage, or 100/300/100. This enhanced level of coverage will cost you about 20% to 30% more per year, but the protection is worth it.
On next post, I will discuss other provisions which most car insurance comes with.
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2 Responses to “Buying Auto Insurance”
Nice post! I have to ask, do you have auto insurance now?
I just found your blog (saw your comment on Get Rich Slowly) so I thought I’d come check it out.
Good stuff!
-HIB
By
HIB (Who am I?) on Aug 14, 2008
Yeah, I’ve learned my lesson
By
moneyexpert (Who am I?) on Aug 14, 2008