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Saving Money on Auto Insurance

We have all heard that we can save hundreds of dollars on our automobile insurance coverage by switching to another insurance company. The truth is that you may not have to switch insurance companies to save on your automobile insurance.

Understanding Automobile Insurance Coverage

The first step in figuring out how to save money on automobile insurance is to understand what types of coverage the standard automobile insurance policies include and determining what risks you are willing to accept or self-insure for given your particular circumstances.

Automobile insurance policies are generally divided into four “parts,” namely Part A, B, C and D. Here is a brief synopsis of each part:

Part A – Personal Liability Coverage.

Part A provides liability coverage for both bodily injuries and property damage that drivers inflict on third parties. This type of liability coverage can come into play if the driver is negligent and the negligence causes harm to another person or another person’s property.

Part A coverage generally extends to the named insured, his or her spouse (for 90 days past the date the spouse ceases to live with the insured), and family members who reside with the insured or his or her spouse.

Part A coverage also extends to persons who are driving the vehicle if they have the owner’s permission to drive the vehicle.

If a third party is driving the insured vehicle and the third party has his or her own insurance policy for a different vehicle, the policy for the third party’s vehicle will usually cover any accidents involving the insureds vehicle.

Most automobile insurance policies exclude several hazards from Part A coverage, including:

injuries or damages caused while the vehicle was being used for business purposes
injuries or damages that were intentionally caused
injuries or damage to property being transported in the vehicle.

Part A coverage in automobile insurance policies is expressed in the following format: $25,000/$50,000/$10,000.

The first figure is the maximum amount that the automobile insurance policy will pay for all bodily injury claims. The second figure is the aggregate that the automobile insurance policy will pay for all bodily injury claims. The third figure is the total amount that the automobile insurance policy will pay for all property damage claims.

While it will not save you money on your insurance coverage, you should check to see that your coverage limits are higher than the ones cited above. In many cases, increasing the amount of coverage will not increase your automobile insurance policy premium payments by very much. This is especially true if you factor in the loss that you could sustain if you did not have the additional coverage and you ended up needing it.
On the other hand, you may be able to save on your insurance premiums by opting not to specifically list infrequent drivers as separate insureds on the automobile policy. For example, parents may opt to rely on the parents automobile coverage to pay for any property or bodily injury claims associated with a child’s use of the parent’s vehicle.

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