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If you own or lease a vehicle, each state except New Hampshire requires you to have a certain amount of auto insurance. And if you also drive your car for your business, you need a commercial auto insurance policy.
While the cost of these covers can add up, luckily there are tips for solo entrepreneurs to save money while staying compliant and safe on the road.
What does auto insurance cover?
Understanding what auto insurance covers and why it is crucial to your financial well-being is essential. Auto insurance is a set of protections that protects you against various potential financial losses, including:
Property coverage, which reimburses you for various damages to your vehicle. There is collision coverage, which pays for repairs after an accident with another car. And comprehensive coverage for theft and specific non-collision claims, such as natural disaster, animal or vandal damage. Each coverage has a separate deductible, which is a fixed amount that you pay before insurance coverage begins.
Medical coverage, which covers injuries sustained by you or your passengers after an accident. Some types pay for expenses beyond medical treatment, such as lost wages and funeral expenses. Medical coverage, also known as Injury Protection (PIP), is required in some states.
Responsibility coverage, which pays for certain expenses if you are involved in a lawsuit. For example, if you have a car accident and you injure someone. Most states require both personal injury and property damage coverage. However, the minimums vary from state to state.
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You can usually also buy:
Uninsured or underinsured motorist coverage, which is for situations where you are in a hit and run or an accident with an at fault driver who does not have enough or no insurance to cover your losses.
Rental car coverage, which pays for a rental while covered repairs are made to your vehicle.
Glass coverage, which pays for cracked or broken windows.
Roadside Assistance, which pays for a tow truck or other services if you get stuck in your vehicle.
Tips for saving on auto insurance
States and auto lenders have different requirements for the types and amounts of auto insurance you should purchase. However, this is only one factor in your rate. Others include the make and model of your vehicle, annual mileage, driving record, age, gender, and marital status. A commercial auto insurance policy can also take into account your type of business and your years of experience.
While you may not be able to change some of the factors that determine your premium (like your age or years of business experience), here are eight ways to lower the cost of auto coverage.
1. Maintain good credit. You might be surprised to know that your credit plays a large role in how much you pay for auto insurance (exceptions include auto insurance in california, Hawaii, Massachusetts, Michigan and New Jersey). Where permitted, insurers use credit-based insurance scores to assess a client’s potential risk and the likelihood of having an accident. This is all the more reason to maintain great scores by paying bills on time and managing credit accounts responsibly.
2. Increase your deductibles. As mentioned earlier, a deductible is an amount that you must pay before the start of insurance benefits. The higher your deductible, the lower your premium will be. For example, you can usually choose amounts such as $ 500 or $ 1,000. However, the potential savings from increasing a deductible vary from state to state and insurer to insurer. Also, remember that increasing your deductible means paying more for covered losses. Therefore, never increase your deductible unless you are sure you have enough savings to cover it.
3. Maximize potential discounts. Insurers offer a variety of discounts, but won’t always know if you qualify for some of them. For example, if they offer a wedding discount and you don’t let the insurer know that you got married, you will miss a discount. So ask your carrier what discounts you can get and other ways to lower your premium. Here are some typical auto discounts you may be eligible for:
Multi-vehicle to insure more than one vehicle.
Safe vehicle to have features such as anti-lock brakes and airbags.
Safe driver to have a clean and accident-free driving history.
Mileage to keep annual mileage below certain thresholds.
Educated driver for completing a defensive driving Classes.
Good student for drivers up to 26 years old who maintain at least a “B” average.
Occupation to work in specific fields, such as the military, medicine or education.
Automatic payment so that your premium is automatically deducted from your bank account.
Loyalty have been a customer for a number of years.
Owner to own a home, even if you insure it with another company.
If you have a commercial auto insurance policy, you can take advantage of discounts such as having a Commercial Driver’s License (CDL), paying your annual policy in full instead of installment payments, and not having to pay your annual policy. gap in your coverage. However, maintaining a clean driving history is one of the best ways to keep commercial auto premiums low.
4. Keep a clean driving record. The fastest way to see your car premium skyrocket is to cause an accident or commit infractions. So, avoid distractions on the road and allow more time to reach your destination. Being a good alert driver can pay off.
5. Sign up for a pay-as-you-drive program. Many national auto insurers have programs that track your driving behavior, mileage, and habits. Known as Telematics Insurance, Usage Based Insurance (UBI), and Paid Insurance (PAYD), they offer discounts to policyholders considered safe drivers. Once you sign up for a PAYD program, the insurer sends you a device to keep in your vehicle that syncs with a mobile app to track your data. This allows your insurer to evaluate you according to various measures and to grant discounts applicable to the renewal.
6. Bundle policies with your insurer. Many insurers reduce premiums if you purchase more than one type of coverage, such as auto and business insurance, or auto and home or renters insurance. This is called a multi-line or “bundle” policy.
7. Omit unnecessary covers. If you have an older vehicle you paid for, consider ditching collision and full coverage to save money. A good rule of thumb is not to buy them unless the annual premium is 10% or less of your car’s value. Otherwise, you will pay more premiums than you could ever collect in benefits. However, as mentioned earlier, accountability is a requirement, and for good reason. If you were the victim of a serious car accident, you could be sued for a significant amount of damages. The point is, you might need more liability than your state’s minimum. Make sure you have enough to cover the value of your personal assets – such as real estate, savings, non-retirement investments – and any business assets for a business policy.
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8. Store policies with care. Each insurer rates you differently and offers different discounts. In other words, the price of an auto or commercial policy is unlikely to be the same with another insurer for the same coverage. Get in the habit of comparing quotes from at least three insurers once a year. Remember that prices change frequently. By regularly collecting multiple quotes, you will know if you have the best possible deal for your personal and business finances.