I live in Idaho. I have not yet payed off the auto loan so I'm required to have full coverage insurance. According to some people I am paying too much (about 700 for 6 months), as they are paying far less. I have geico, but from time to time I look around and get quotes, and it is always slightly higher than what I have now. However, that might be because I am opting for coverage I might not need.
So the question boils down to, what is the bare minimum requirements for "full coverage" auto insurance in Idaho?
Victor B has a great answer. All I would add is that you should ask your finance company what exactly they mean by "full coverage." As Victor alluded to, "full coverage" is not any kind of set standard for the insurance industry. It just means liability + comp/collision. But, the sticking point here is that you need to know exactly what your finance company wants to make it "full." The factors here you need to know are:
A. What does my deductible on comp and collision need to be? (Deductible is how much you pay in the event of an claim before your insurance company begins to pay. Your finance company usually wants your deductible to be LOW, but that means that your premiums are more expensive -- because the lower your premium is, the more the insurance company is going to pay in the event of a claim. Usually, people who are trying to save money try and raise their deductible to something like $1000 -- which is basically a gamble. You're gambling that you won't get into an accident and won't ever have to pay it. If you have some wiggle room, go higher on collision and lower on comprehensive. i.e.- $1000 on collision, and $250 or $500 on comp. Comp covers things like window breakage, theft of vehicle, hitting a deer, etc, and as such will TEND -- not always, as in the case of theft -- to be smaller claims. Thus, you'd want your deductible to be lower so that insurance kicks in and actually pays something.)
B. What do my liability limits need to be? (Liability is what the insurance company pays to someone else in the event of an accident. So if you hit someone and injure the driver and total the vehicle, your insurance company pays out of the liability coverage to the other person. You want these numbers to be HIGHER because it will cover more liability, but of course this means your premium will go up. Liability comes in three numbers -- usually, depending on your state it may only be two or one. But if there are three, then the first number represents what your insurance company will pay to EACH PERSON in an accident that you have liability towards. The second number represents the "cap" of what your insurance company would pay in total to other people you have liability towards. And the third number represents damage to property. Thus, a common liability set would be: 50/100/50, meaning your insurance company would pay up to $50k per person, but no more than $100k to any group of people, and $50k for property damage. Alternatively, it's possible you may have a simple "single liability" number like $300k, which just means that your company will pay out whatever liability is owed up to $300k. KEEP IN MIND that these numbers represent LIMITS. So, if you have an accident where you cause more damage than the liability provided, YOU will end up being sued by the other parties for the remaining amount of liability. Consider this situation: you fall asleep at the wheel and cross a median, totaling a $75k Mercedes and badly injuring its driver. Her total medical costs are $150k. If you have 50/100/50, you will end up owing her -- assuming a civil suit against you grants her just the costs and no more -- $100k in medical costs and $25k for her vehicle. This is because insurance only covered $50k in medical liability to a single person and $50k on her property.)
Being that your finance company is the one who is saying you're required to have full coverage insurance, it's important you ask them what it is they want so that there's no breach of contract if your vehicle is totaled. Generally, finance/purchase contracts require lower liability limits and higher deductibles, while something like a lease is going to require high liability limits and low deductibles.
If you're concerned about getting lower cost insurance, one tip I have is to consolidate all your insurance into one company and get a multi-line discount. For example: call a major insurer and offer the salesperson to get auto insurance and renters/homeowners insurance, life insurance, etc. all with them and ask what the discount will be. (You should have all these products anyway, so if you can get a better deal than you're already getting on all of these products with one company, then why not do so?)
Also: remember that your credit and driving record affects your premiums. Get your credit score UP UP UP and stop speeding. Watch your premiums drop :)
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I'll have to say, those "people" who offer comments don't know what they are talking about, the reason as as follows:
* insurance premium depends on a LOT of factors, such as location, type of car, specific model of car, engine size, classification, driver's age and gender, driver's profession, estimated mileage per year, prior driving record, and so on. Just because THEY are paying less than you doesn't necessarily mean you are paying too much.
* EXAMPLE: I just switched from a '96 Ford Contour 2.5L V6 to a '99 Olds Cutlass 3.1 V6. Despite the newer car, my insurance premium actually DROPPED, because the smaller Contour is considered a sporty car, and the Olds is NOT.
* There's no such thing as "full coverage". You are required to carry "collision coverage", which means that even if you banged up the car (i.e. your fault) the car will still get fixed (or someone will pay for the damages, so the bank who loan you money for the car will have SOME recourse in case something happens).
There are additional coverages that are optional or required, such as physical proertpy damage, medical damage, uninsured/underinsured coverage, comprehensive damage (covers natural disasters, vandalism, theft, etc, separate from collission), rental car (when your car is in the shop), and more.
Most states require physical property and medical damage, commonly called "liability", which means your insurance will pay the other party if you are at fault. Minimum amounts are required, though most people buy significantly more in case damages exceed their coverage. Remember, insurance only pay up to your coverage, and not a penny more.
Have your insurance agent compare the premiums for different coverage amounts, different cars, different driver combinations (if you have more than one vehicle and more than one driver) to arrive at the minimum premium. If you are only paying a few more dollars a month to enjoy the extra coverage, then I'd say it's worth it for the peace of mind. Of course, only YOU can decide if you rather save those dollars now, vs. the risk fo paying out big bundle later.
you forgot to include age, driving record, and type of vehicle. Those are contributing factors when pricing policies.
When the lender requires "full coverage" on a vehicle it simply means that in the event of a loss the coverage must be enough to pay the balance due on the loan. Normally it would consist of collision coverage as well as the state minimums for liability. While coverage for theft, comprehensive , and other perils are normally a good idea they are not mandatory. But bear in mind in the event of a loss you will be held responsible to pay.
