One of the most crucial aspects of being a car owner is to ensure that our vehicle is covered if we are involved in an accident. While car insurance seems more a pain than a benefit to first-time car buyers, there are compelling reasons why it’s important.
Most likely, the state or region you live in and drive frequently impose rules and regulations that require you to have a certain amount of auto insurance on your vehicle, which also varies from state to state.
While other states only require you to have minimum liability, there are states that require you to cover more than that.
When authorities find out that you are driving a car without insurance, you are running the risk of having your car impounded on the spot.
In fact, there are states that will not allow you to continue driving once they know that your car is not insured. Also, not only will your car not be impounded, you will also have to pay heavy fines and fees.
At worst, the authorities may also have your driver’s license suspended or revoked for a certain period.
But aside from legal repercussions, car insurance protects you from personal liability in case you be in an accident. And this is the main reason why you should definitely get a car insurance.
For instance, if you accidentally crashed into another car, you can be held personally responsible for the cost of medical bills if a person is injured, and very large sum if a person is killed. You will also have to shoulder all the expenses for the damages which have been caused by the accident.
Unless you’re someone who is rich enough to cover these indemnities, you may need to sell your business, your home, or any other assets just to pay the cost. Depending on the intensity of the damage you’ve caused, you might end up spending the rest of your life paying them off.
But what about the damages to your car? Who’s going to pay for it?
That’s where comprehensive car insurance comes in.
With it, you can claim from your insurer for accidents that are deemed to be your fault, as well to those when fault cannot be proven. E.g. if you return to your car after eating in a restaurant to find that someone has vandalized it.
With a comprehensive car insurance, you will be able to retain your peace of mind in case your car gets flooded, scratched, or stolen.
To sum it up, here are the main takeaways from the infographic below from iChoose.ph which argue why every car owners must have a comprehensive car insurance in their standard policy.
What does a comprehensive insurance cover?
Coverage varies from policy to policy. But essentially, a comprehensive insurance incorporates third-party, fire and theft cover, as well as accidental damage to your car.
- Theft/Vandalism
- Weather and Natural Calamities
- Animal Damage
- Lower Deductible
- Expense in Excess of CPTL
What Else You Need to Know About Car Insurance
While we’ve covered the essentials of why car insurance is necessary, there’s a lot more to think about when choosing and maintaining your policy.
Here are some additional tips and factors you need to know about to make sure you’re fully covered and getting the best value for your money.
1. Shop Around for the Best Policy
Car insurance rates vary significantly from one insurer to another. Even if you’re happy with your current provider, it’s a good idea to shop around periodically. Compare quotes from multiple companies—this can help you identify a more affordable or better-suited plan. Some insurers also provide online calculators that let you compare coverage and pricing in real-time.
Beyond price, consider each company’s customer service and claim handling. A cheaper policy might not be worth it if the company makes it difficult to file claims or has poor customer service.
2. Understand Your Coverage Needs
Car insurance isn’t one-size-fits-all. While most policies come with liability coverage, you need to assess what additional protection makes sense for you. Factors like where you live, how much you drive, and your vehicle type all influence your ideal coverage.
For example, if you live in an area prone to extreme weather, such as floods or hailstorms, you’ll want comprehensive coverage. If your car is older and has depreciated significantly, you may decide against collision insurance since the cost of the premium may be higher than the car’s value.
On the other hand, if you’ve invested in a new or luxury vehicle, you’ll likely want more protection, including gap insurance, which covers the difference between what you owe on the vehicle and its current market value if it’s totaled.
3. Bundle Your Policies for Discounts
A common way to save money is by bundling your insurance policies. If you already have homeowners or renters insurance, ask your provider if they offer discounts for combining them with your auto insurance.
Many insurance companies will give you a significant discount for carrying multiple policies with them.
4. Raise Your Deductible to Lower Your Premiums
One way to lower your monthly or yearly insurance premium is by increasing your deductible. The deductible is the amount you pay out-of-pocket before your insurance kicks in. However, while this reduces your regular payments, it also means you’ll pay more upfront if you need to file a claim. Be sure you can afford the higher deductible before choosing this option.
5. Don’t Forget About Discounts
Most insurers offer a variety of discounts, many of which are easy to overlook. You might qualify for discounts based on your driving habits, such as maintaining a clean driving record, using telematics or tracking devices that monitor safe driving, or taking defensive driving courses.
Some insurers also offer discounts if your car has advanced safety features, such as anti-lock brakes, airbags, or anti-theft systems.
Even factors like your occupation or being a student with good grades can reduce your premium. Make sure you ask your provider about all the discounts available so you don’t miss out on potential savings.
6. Review Your Policy Annually
Your insurance needs can change over time, so it’s important to review your policy every year. Did you move to a new area, pay off a car loan, or get married? All these factors can affect your insurance premiums and coverage requirements. By reviewing your policy regularly, you can ensure that it’s still appropriate for your circumstances and make adjustments if needed.
For instance, if you’ve recently installed security features on your vehicle, like an alarm system or tracking device, your insurer may lower your rates. Similarly, if you’re driving fewer miles each year, you could qualify for a low-mileage discount.
7. File Claims Wisely
Filing too many claims can cause your premiums to rise or even result in policy cancellation. If the damage to your car is minor, consider paying for repairs out of pocket rather than filing a claim.
Save your insurance claims for major incidents to keep your premiums low in the long run.
Final words
With these tips in mind, you’ll be better equipped to make informed decisions about your car insurance. Being proactive in managing your policy can save you money and ensure you have the right coverage when you need it most.
About The Author
This post was written by Erwin Reyes, who has a combined experience of more than 15 years in the car insurance industry in the Philippines and Australia.
