AUTO INSURANCE is supposed to provide peace of mind. But the wrong policy can provide a false sense of security – and leave consumers in jeopardy of serious financial losses.
You have to know what you’re buying, especially if you apply for a policy by phone, by mail or on the Internet. Some consumers assume they’ll have adequate coverage as long as they buy state-mandated minimums. However, most states only require motorists to carry liability insurance, which pays for injuries you cause to another person or property damage you cause to someone’s car.
If you want to protect your own car, you need to buy extra coverage. Collision pays for damage to your car when it hits another vehicle, rolls over or collides with an object, like a tree. Comprehensive protects you when such things as fire, theft, storms, floods or vandalism result in damage to your car.
Some lenders and leasing companies require collision and comprehensive as a condition for financing a car, so make sure you comply with the terms of your contract.
You can save money on comprehensive and collision insurance by increasing the deductible on the policy. A deductible is the amount of money you agree to pay before the insurance company makes any payment on a loss.
You can save about 15% to 30% by increasing your deductible from $200 to $500, industry experts suggest. If you go from a $200 to $1,000 deductible, you can save 40% or more. You should have enough money set aside to cover whatever deductible you choose.
You also may be able to save money on your car insurance premiums by taking a state-approved six-hour defensive driving class. In New York, you generally get a 10% reduction in your liability, no-fault and collision premiums for three years. In New Jersey, you generally get 5% off those same premiums.
Asa Aarons is a consumer reporter who appears on “News 4 You” at 5:30 p.m. weekdays on WNBC-TV, Channel 4. His special Daily News column appears Mondays, Tuesdays, Thursdays and Fridays. Send your questions to: Ask Asa, P.O. Box 3310, New York, N.Y. 10116 or e-mail him at
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