Apples to Apples: Auto Insurance Cost Comparisons

Thinking about saving cash by switching auto policies? It’s tempting to surf around on the Internet and glance at cost comparison charts with lower bottom lines.

“But you might not understand what you’re giving up to get that lower price,” says Paxton Hurst, agency manager at the Texas Farm Bureau Insurance office in Denton. “A higher price is typically for better features — and a lot of times it’s not that much more — maybe just $10 or $15 dollars a month.”

Hurst and Regional Underwriter Manager Stephen Fehler agree that when you compare policies, you should make sure you’re comparing the same types of coverage. When considering a change to another carrier, take into account the following:

• Liability coverage. The current minimum liability limits are $30,000 for each injured person, up to a total of $60,000 per accident, and $30,000 for property damage per accident. This basic coverage is called 30/60/30 coverage. But you can pay a little more to have $50,000 for each person/$100,000 per accident/ $50,000 property damage protection — or higher. “You need to think about the first two numbers because they’re protecting your assets,” Hurst explains. “If you have $100,000 in a savings account, for instance, you want to have enough coverage to protect you from losing that money in a lawsuit. You want to cover liquid assets and future assets you might inherit, like land.”
• Collision and comprehensive coverage. For those who have a car loan, keep in mind most financial institutions will require what’s known as collision and comprehensive coverage, notes Fehler. And even without a loan, you’ll like having it if you do crash your car or suffer damage from, say, a hailstorm. Obviously, collision coverage pays for repairs to autos damaged in accidents while comprehensive coverage pays for damage from anything other than a crash — theft, hail, fire, and the like — but remember it doesn’t cover every conceivable way a car can be destroyed. “The term ‘comprehensive’ is really a misnomer,” explains Fehler. “There are always exclusions, but generally, ‘comprehensive’ covers damage not caused by a collision.”
• Personal injury protection. This feature covers medical bills and/or up to 80 percent of lost wages up to a limit you choose, anywhere from $2,500 to $10,000.
• Medical payment coverage. A less expensive option than personal injury protection is to select coverage for just medical payments up to $5,000.
• Underinsured or uninsured motorist coverage. This protects if you’re involved in an accident and the other driver is at fault and doesn’t have enough insurance — or worse, no insurance — to cover the cost of your loss.
• Towing service. There isn’t a more helpless feeling than being stranded on the side of the road. Having the freedom to call for a tow as part of your policy can be a big relief.
• Rental car coverage. Paying for a rental day after day while your car is in the shop due to an accident can really add up.

So make sure you know the features of the policies you’re comparing before you rejoice over a few dollars off a discount policy. It’s probably cheaper for a reason. And if saving money on your auto policy is the goal, consider raising your deductible to have a lower premium. Just make sure you have the coverage you want and need to preserve your financial security.