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What car insurance coverage do people like you buy? Find out

By Posted : 03/30/2011
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How much car insurance should you buy?  There’s no one-size-fits-all answer. The type and amount of coverage that's right for you depends on your budget, assets, vehicle, where you live and other factors.

But what do other people like you buy? Now that we can answer! Insurance.com's new "What insurance do drivers like you buy?" tool reveals the insurance choices of drivers similar to you.

You can then make a car insurance comparison by shopping for the lowest insurance rates for your preferred coverage option. 

Car insurance: Younger vs. older drivers

The "What insurance do drivers like you buy?" tool also reveals interesting details about the coverage that certain age groups are likely to purchase.

For example, when looking at car insurance for young adults, you find that many younger drivers who own an older car and rent their living quarters are likely to purchase low amounts of liability insurance. Many also skip collision and comprehensive coverage.

Among the top choices for 16- to 24-year-old renters in Connecticut who own 2001 vehicles, for instance, the tool reveals that:

  • 58 percent buy the minimum amount of liability coverage required by state law
  • 39 percent purchase no collision or comprehensive insurance

On the other hand, older drivers who own homes tend to purchase higher and broader amounts of coverage.

Among homeowners 35 and older in Connecticut who own 2001 vehicles, the most popular choices far exceed the state's liability requirements and include comprehensive and collision coverage.

Car insurance needs change over time

Auto insurance needs generally increase as we get older and acquire assets.

"The rule of thumb is to figure out your net worth and to purchase enough liability insurance to cover you for those assets," says Thomas Capp, vice president of sales for Esurance, an online direct-to-consumer insurance company. "We always recommend more than the state minimum even if customers don't have any assets."

Since younger people generally have lower levels of net worth, they may not need as much liability coverage, which pays for damage and injuries you do to others. Even so, Capp says, it’s a good idea to purchase above state minimum requirements because those tend to be very low.

Consider your salary, property and investments, and revisit your liability choice each year.

"You need to change the coverage as your life progresses," Capp says.

As you get older, your net worth is likely to increase. Capp recommends buying an umbrella insurance policy if your net worth exceeds the maximum amount of liability coverage available on an auto insurance policy.

An umbrella policy covers you for any damages you cause from a car accident that exceed auto insurance liability limits. Umbrella policies are inexpensive for the amount of coverage and peace of mind they provide, Capp says.

How a car's age affects auto insurance choices

Sometimes it's the age of the car – and not the age of the driver – that determines how much car insurance coverage you should carry.

Consider collision and comprehensive coverage. Collision pays for repairing your vehicle when it's damaged in an accident. Comprehensive coverage pays out if your vehicle is stolen or damaged by something other than a traffic accident, such as vandalism, natural disaster, fire or collision with an animal.

the premium for collision and comprehensive exceeds 10 percent of your vehicle's value, Capp says, it might be worth dropping them – but only if you have money on hand to replace the car if it were totaled.

If you are still making payments on the car, you probably can forget about dropping this coverage, no matter the age of the car. Lenders generally require you to carry collision and comprehensive coverage when you don't own the car outright.

Ways to save at any age

Some ways to save cut across all age levels. For example, raising your insurance deductible reduces the car insurance premium.

However, if you still owe money on your car loan, make sure to check with your lender before raising the deductible, says Sandra Spann, American Family Insurance spokeswoman. Sometimes, lenders don't want borrowers to raise deductibles because the increase may boost the risk of a borrower default if the car is wrecked.

As you weigh insurance choices, don't judge policies by the price quotes alone, Spann says. Instead of being wowed by cheap car insurance, consult an agent to make sure you understand exactly what a policy covers before you buy.

"An agent is going to talk to you and guide you through the process. If not, find yourself another agent," she says. "An accident is not the time to find out if a cheaper policy is going to pay for all your needs."

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