Every so often you get your car serviced, and periodically you get it tuned up. The mechanic cleans it up, looks for any problems, and does some routine maintenance on the engine to keep it running smoothly. Just like with you car, it’s important that your car insurance gets a periodic tune-up as well. Things change, and just as your jeans from 10 years ago may no longer fit, the same is true of your car insurance.
The first part of your car insurance that you need to look at is your liability limits. When you were a broke college student, those state minimum limits might have been okay, since your most valuable possession was your futon. Now that you’re a grown-up with a job, a mortgage, and a family, you have a lot more assets that need protecting. Consider raising your bodily injury liability to at least $100,000 per person and $300,000 per accident. This level will better protect those assets you’ve worked so hard to acquire.
The other part of your car insurance that may need a tune-up is your physical damage coverage. This comes in two types: comprehensive, which covers things other and an accident like vandalism and weather, and collision. Consider the type of vehicle that you are driving now. When you first acquired your current insurance, perhaps your car was brand new, or finance, and now it’s older and paid for. If that is the case, consider whether you want to continue carrying collision on the policy. Comprehensive is a less expensive coverage, and is generally a good investment, even for an older car. Collision, on the other hand, can be quite expensive, and the cost of the coverage may outweigh the benefit.
If you still want to fully cover the car with comprehensive and collision on your older car, consider lowering your deductibles so you get more benefit from the coverage if you do have a claim. If the annual premium is less than 10% of the car’s value minus the deductible, then the coverage is probably a good investment. Otherwise, you are probably better off dropping the collision and saving the difference in premium.
Remember. having the right coverage is just as important as getting the right price. Just like any other routine maintenance, tuning-up your car insurance will make sure you still have the right policy for your family and your car.