Personal Auto Insurance
Nearly all states require vehicles to carry Liability Insurance. In Georgia, the minimum for Bodily Injury Liability Coverage is $25,000 per person, and $50,000 per accident, and some states require even less. No matter what your state requires, get a policy with coverage limits of at least $100,000 per person injured and $300,000 per accident, and more if possible. Lower limits won't protect you because the average personal-injury award in such cases in recent years has been about $323,000, according to the Insurance Information Institute. Get at least $50,000 in property-damage-liability coverage. Though state limits are lower, repair bills can escalate quickly on luxury cars and other expensive vehicles, and you could be involved in a multi-car accident. Remember that if you have an at-fault accident and you are sued, you are personally responsible for any amounts awarded that are above your liability coverage limits, which means you can lose your home, your savings, your future income, and other assets, and be forced into bankruptcy by insufficient liability coverage. In addition to higher liability coverage limits, you may want to consider buying a separate Umbrella Liability Policy, which may provide an additional $1 million or more of liability coverage. Umbrella Liability Policies are not expensive for the amount of coverage they afford, and if available usually cost around $250 to $350 per year.
Collision and Comprehensive Coverages are the physical damage coverages that repair your vehicle if it is involved in an accident. Collision covers damage to your car when you collide with another vehicle or an object. Comprehensive is also known as Other-Than-Collision, and covers damage caused by perils such as broken glass, falling objects, fire, flood, vandalism, theft, or hitting an animal. The fastest way to cut your insurance premium is to increase the deductible on your physical damage coverages, particularly collision. Raising your deductible from the common $200 or $250 limit to $500 can cut 10 to 15 percent from your insurance bill. Weigh these potential savings against the higher out-of-pocket expenses you'll incur if you file a claim. It is usually better to choose a higher deductible for collision, like $500, and a lower deductible for comprehensive like $100. The most common comprehensive claim is for broken glass, and if you have a high deductible, you are paying for a coverage that you can't use. Usually there is not a major difference in cost between a $100 or $500 comprehensive deductible. Just remember that in the overall scheme of things, physical damage coverage and deductibles for your vehicle are much less important than adequate liability coverage.
For older cars with no lien, you may be able to drop comprehensive and collision coverage entirely. If the car is more than five years old, at least consider this option. After all, keeping up costly premiums makes little sense if the car isn't worth that much. Remember that any payout will be based on the market value of your vehicle, less your deductible. As a rule of thumb, don't keep up coverage if the premium for collision and comprehensive is more than 10 percent of the retail used value of the car, minus your deductible.
Georgia does not require Uninsured/Underinsured Motorist Coverage. Considering the number of uninsured vehicles on the road, and the driving record of the people driving those uninsured vehicles, you should strongly consider including it anyway. If your vehicle is hit by a driver who has no or insufficient insurance, or by a hit-and-run driver, this UM will cover injuries to you and your passengers and other expenses that ordinary health insurance does not pick up. Basically, if you are hit by an uninsured driver, your insurance company will step in and take the place of the insurance that the other driver should have had, paying for injuries, and repairs to your vehicle. If you have to pay a deductible on this coverage, your insurance company will attempt to recover your deductible from the other party. With the new electronic insurance reporting in Georgia, there are fewer uninsured vehicles on the road, but they tend to be very accident-prone. The State may suspend their drivers licenses and registrations, but since they don't usually put them in jail or take away their vehicles, you can help to protect yourself by buying Uninsured Motorist Coverage.
You may also be able to save on Medical Payments Coverage. Regardless of fault in an accident, this coverage will pay doctor and hospital bills for you and your passengers. Be sure to check to see if a combination of your life and health insurance would cover these items. If so, you may want to decline this optional coverage, which could save more than $100 a year. All that being said, medical payments coverage can help to expedite your medical treatment, if you are injured in an accident, and also is paid with no deductible. If you elect to buy medical payments coverage, you usually should opt for at least $5,000 per person, and preferably more, because of the extreme cost of medical treatment. If you don't have any health insurance, you should opt for as much Med-Pay coverage as you afford. Georgia is not a No-Fault state, so Personal Injury Protection is generally not available, but medical payments coverage in some ways is similar.
If you buy or lease a new car and finance a major portion, you should consider GAP Coverage. Gap coverage will finish paying off your loan or lease if your car is totaled, and the value is less than the payoff on the loan or lease. Sometimes, the "gap" between payoff and value can be thousands of dollars. You can buy Gap Coverage from your insurance agent or from the car dealer, although the car dealer will usually finance the cost, and then charge interest on it over the life of the loan. Be sure to check the price with both the agent and dealer, when deciding who to buy Gap Coverage from.
Rental Reimbursement Coverage is a good coverage to include, particularly if you do not have a back-up vehicle readily available.. Rental Reimbursement Coverage will reimburse you for the cost of a replacement rental vehicle, while your vehicle is unavailable to you due to a collision or comprehensive loss, either because it is undriveable or because it is in the shop for repairs. Although you can buy rental reimbursement coverage that pays as little as $10 or $20 per day, you should opt for at least $30 per day coverage, for up to 30 days. Generally, your collision, comprehensive, liability, and other coverages will transfer over to the rental car, so it may be unnecessary to purchase additional insurance from the car rental company. When you are driving a rental car, it is just as though you were driving your own vehicle.
Towing and Roadside Assistance Coverage may be a good coverage to include. In order to buy this coverage, your usually have to already have collision and comprehensive coverages. Some towing coverage only pays for towing, up to $25 or $50 per incident. Others towing coverage may pay up to $100 per incident for towing, roadside assistance, and even locksmith charges. If you have a motorclub account, you should not need Towing Coverage.
In regards to After-Market audio equipment, and other types of non-factory-installed equipment, it generally may not be covered, unless you buy special coverage for it. This also includes special paintjobs, and custom wheels and tires.
One of the easiest ways to save money on your car insurance is to buy your car insurance, homeowners and life insurance from the same company. You can usually get discounts for having multiple policies with the same company. Not only that, it also makes life easier if you have one insurance company and agent to deal with for all your insurance needs.
New Innovations in Auto Insurance
Insurance companies generally give discounts for good driving records, and good claims history. If an operator has an at-fault accident (liability or collision claims), they normally lose the good driving discount, and may be surcharged for the accident as well, and that can result in an increase in the cost of insurance of hundreds of dollars per year. A small number of insurance companies have started offering options that forgive the effects of one or more at-fault accidents--Accident Forgiveness. They also may give a $100 Deductible Reward on the customer's collision coverage for not having a collision claim, and those Rewards can accumulate annually, so that the collision deductible can eventually be reduced by $500. As mentioned earlier, if a person's car is totaled, it means that the cost of repairing the vehicle to equal to or more than the value of the vehicle, and the customer is normally paid the market value of the vehicle less their deductible. A new innovation called New Car Expanded Protection is similar to replacement coverage on homeowners insurance. It says that if a person buys a brand new car, which is totaled within 3 model years in certain types of accidents, the car will be replaced with a current model-year brand new car of the same type. For example, if you buy a new 2007 Ford Expedition, and in 2009, your car gets totaled in a wreck (even if it is your fault), your 2007 Expedition will be replaced with a new 2009 Expedition. These features are only offered by a very small number of companies, and are a strong reason to choose one of them. Since those companies are also the ones using financial scoring and other methods of price-segmentation; customers that are the best risks can frequently get a much better policy with all the bells and whistles for less than they are currently paying for plain vanilla coverage. More for less is always good.
How Car Insurance Is Priced
Auto insurance rates in Georgia are based on claims experience by insurance companies within the State of Georgia. Claims from outside of Georgia, or from catastrophes in other States, like hurricane Katrina, do not impact rates in Georgia. The ability to charge adequate rates to pay claims, pay operating expenses, and make a reasonable profit is vital to the health of individual insurance companies. Rates in Georgia must be approved by the Department of Insurance, and rate requests submitted to The Insurance Commissioner are considered based on these factors. Insurance companies try to charge based on the relative claim-filing probability of customers. Companies have historically done this by rating based on age, marital status, driving history, driving experience, claims history, prior insurance record, type of vehicle, whether driven for work or pleasure, annual mileage, and distance to work. It is not fair or reasonable to expect good drivers to pay the same rate as poor drivers for the same amount of coverage. Insurance companies use these rating factors to try to charge each customer a fair rate based on the relative likelihood of future claims. Insurance companies have extensive statistical information on prior claims, and try to develop sophisticated models to help predict future claims, and develop pricing accordingly.
A growing trend among insurance companies is the use of financial or credit scores in the pricing of insurance. This is based on the premise that factors reflected on one's credit report can be a very good predictor of future claims. Insurance companies develop algorithms to study the dozens of types of information found in credit reports. Some factors are more important than others, and the algorithms assign a weight for the various factors, and price the policy based on the relative strength or weakness of the financial score. Customers that are an above-average risk, will receive a better rate, and drivers that are a poor risk will pay a higher price. Most people who save money because of a good financial score like this concept.
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