Car insurance is not only a necessary evil but it is also one of the most dreaded chunks in your budget mainly because you have some very tricky decisions to make. How much insurance should you buy? How much is enough and what would be too much? It can be a real headache.

When it comes to protecting yourself, the best bet is to err on the side of caution and be a little more liberal with the limits of an automobile policy where they really count. In fact any good insurance agent worth their salt will tell you that you should buy as much car insurance as you can afford. While this is a good guideline it doesn’t really help you. The advice is about as useful as a stockbroker’s tip to buy low and sell high. It might be good basic advice but it doesn’t get you any closer to an informed decision. Stick with me and I’ll attempt to explain the process of buying the right car insurance in easy laymen terms.

To begin with, the portion of auto insurance that really comes into play when you have an accident involving other people and/or property is the liability coverage and/or bodily injury protection.

In many states, this coverage is the law. This is smart, very smart. But, and this is where the confusion starts, the problem is the required limits are often very low. This leaves the door open in the event of a major crash that the other party will come after the driver directly for any damages over and above the policy limits.

So, what exactly does that mean?

Let me illustrate: If you live in a state where the minimum liability requirement is for example, $40,000, that’s all the insurance will cover in a crash. It might sound a lot but that means that if another person’s injuries are severe or property damage is extensive, the actual costs can be very much greater. You’ll find that the $40,000 doesn’t go very far and is not nearly enough.

To give you an idea of what sort of problems this can cause, just check the price of an average one-night stay in a hospital. It is not cheap. This means the person involved in the crash or the owner of the property might come after you for the difference. This can and does happen.

You can be prepared for this kind of situation by protecting yourself and your assets in a crash by simply increasing the limit on bodily injury coverage and liability insurance. So instead of taking that basic $40,000 limit, go for $100,000 per person and $300,000 per accident instead. Surprisingly the cost difference of the insurance policy isn’t that big but the savings down the road in the event of an accident can be great.

Here is something else to consider: While it’s not always the case, a higher limit policy can give a lawyer leverage on your behalf after an accident. More often than not, the other party will be willing to settle for the limit of the policy. This is good news for you and can keep you out of court. But, if the policy you have is low on coverage, then they might not be so keen to settle. What you will usually find instead is that they will opt to sue you directly, something you really don’t want to have happen.

Hopefully I have given you a few things to think about. While having too much insurance is a waste of money, not having enough can lead to tragic events, which will have effects on the rest of your life. If you are wise you will protect yourself and your assets in the event of a crash by making sure a reasonable amount of coverage is provided.

True you might find yourself paying a few extra dollars a month for a higher limit policy and you might never use it but it can mean all the difference in the world if a crash does happen. It will be money well spent.

Timothy Gorman is a successful Webmaster and publisher of Top Auto Insurance Providers. A website that specializes in providing auto insurance advice to include easy ways to find discount auto insurance online that you can research in your pajamas in the comfort of your own home.

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Shop around for auto insurance and the price can vary buy a few hundred dollars, depending on the feature of the insurance and the company you buy from. Below are a few ways to save money.

Shop around and compare prices

Prices differ among insurance companies, shop around! Get at a minimum of three quotes. Sites like Insurance For Everything.com make it easy to get quotes! You can easily access information on the internet or call the companies, which is more time consuming. State insurance departments may also provide price comparisons of by major insurance companies.

Get quotes from different types of insurance companies.

Some insurance companies sell through their own agents which have the same name as the insurance company. Others sell through independent agents, who offer policies from several insurance companies, while, others sell directly to consumers over the phone or via the Internet.

Don’t just consider price!

You want a reputable company that answers your questions and handles claims fairly, efficiently and quickly. Ask coworkers, friends and relatives for recommendations. Getting real life feedback from current customers is a great to gage an insurance company performance. Also, select an agent or company that will take the time to answer your questions.

Compare insurance costs before you buy a car

Check insurance costs, before you buy a new or used car. Most people don’t consider cost to operate a vehicle includes the cost of the insurance. Insurance cost premium includes the car’s price, repair costs, its safety record and the likelihood of theft. Most insurers offer discounts for features that reduce the risk of injuries or theft, which include air bags, anti-lock brakes, daytime running lights and anti-theft devices. Some states require insurance companies to give discounts for cars equipped with air bags or anti-lock brakes.

Cars that are favored by thieves cost more to insure!

Ask for higher deductibles

Deductibles are the monies paid upfront before an insurance policy kicks in. You can lower your costs substantially, by requesting higher deductibles. For example, you can increase deductible from $200 to $500, will reduce your collision and comprehensive coverage cost by 15 percent to 30 percent. Further more; increasing your deductible to $1,000 may save you 40 percent or more.

Other items to consider include but are not limited to:

Reducing coverage on older cars by dropping collision and/or comprehensive coverages, buying your homeowners and auto coverage from the same insurer, Take advantage of low-mileage discounts, seeking out group insurance, maintaining good credit, seeking out safe driver discounts, etc.
When you comparison shop, inquire about discounts* for:

* $500 deductible
* $1,000 deductible
* More than 1 car
* No accidents in 3 years
* No moving violations in 3 years
* Drivers over 50-55 years of age
* Driver training course
* Defensive driving course
* Anti-theft device
* Low annual mileage
* Air bag
* Anti-lock brakes
* Daytime running lights
* Student drivers with good grades
* Auto and homeowner’s coverage with the same company
* College students away from home
* Long-time customer
* Other discounts

Please, don’t forget that the key to savings is not the discounts but the final price. An insurance company that offers few discounts may still have a lower overall price.

Patrick Birmingham - Mechanical Engineer, MBA, Six-Sigma Green Belt, Web Master (http://www.mzeus.com, http://www.insuranceforeverything.com and http://www.cellphonedigest.net).

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Calculating exactly how much auto insurance you should buy can sometimes seem to be a quiz fit for a mathematician. Every state has some guidelines and ‘must-haves’ in their requirement for auto insurance. One can use this as a sort of starting point, but there is a lot more that needs to be seen and evaluated.

Broadly speaking, there are 6 basic parts of an auto insurance policy. These are: Bodily Injury Liability, Property Damage Liability, Personal Injury Protection, Collision Coverage, Comprehensive Coverage and Uninsured Motorist Coverage. In most states, it is important to include the first two parts in the policy while the others may or may not be mandatory.

Bodily Injury Liability - Insurance companies generally recommend a minimum of $100,000 per person and $300,000 per accident for bodily injury liability coverage. Being underinsured for this coverage may be harmful for the insured as he can lose his assets in a lawsuit resulting from an auto accident in which he is found to be at fault.

Property Damage Liability - The recommended coverage is a minimum of $50,000. Like in the previous case, the insurer stands to lose his assets if not adequately insured.

Personal Injury Protection (PIP) - PIP coverage ensures that the insurance company pays for the medical expenses and/or any lost wages and other costs that may arise when the insured is injured in an accident. Minimum PIP coverage of $10,000 is usually recommended. The insurer generally pays around 80 percent of the losses and also pays a death benefit. It may also cover the medical expenditure of the passengers of the insured as well. The expanded version of this coverage is called ‘no-fault’ coverage wherein the insured gets the insurance amount irrespective of whose fault it was. In some states this too may be mandatory in order to provide for child care and lost wages.

Collision Coverage - Collision coverage pays for the repairs of the car after accident and is normally the most expensive component of the auto insurance. One can lower this amount by having a higher deductible. This means that the insured is taking the risk of accident free driving upon him. If he is involved in an accident, he will have to pay up a higher amount before the insurance company chips in. It might be a good idea to get the vehicle’s value assessed before deciding upon how much cover one would like to take.

Comprehensive Coverage - Comprehensive coverage pays for damage to the car of the insured resulting from fire, theft, vandalism, windstorm, glass breakage, and the like. Like in the above case, assess the vehicle’s value to make sure it’s worth the amount that this coverage costs. This coverage too comes with a deductible and the insurer will not pay more than what the car was worth when it got wrecked.

Uninsured Motorist Coverage - This coverage pays for the injuries of the insured even if he is hit-and-run by a driver or someone who doesn’t have auto insurance. As the number of uninsured and underinsured drivers is high, it is recommended that a minimum amount of $100,000 per person and $300,000 per accident be allocated under this coverage. This coverage is not important if the ‘no-fault’ coverage is in action.

Take the above points into consideration and then gauge your actual insurance requirement. If required, take quotes from several insurers before deciding upon the insurance value that you need.

Jon Atkinson recommends that you visit http://www.cheap-autoinsurance.com/ for more information on auto insurance.

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