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Do you need to check your math on car insurance?

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There comes a time every month when we are forced to sit down at our computers, tablets, or kitchen tables to balance our checking accounts and, by extension, pay our bills. Whether this is accomplished by keystrokes, finger swipes or mailing checks, this necessary evil should provide us with some idea of how much is in our accounts, how much we owe and how much we are paying.

While we certainly pay close attention to things like credit card statements, there are other items we become so accustomed to blindly -- and blithely -- paying that we don't even think twice before proceeding. 

If you have a hard time accepting that you do this, consider the car insurance statement you receive every month, every six months or even once per year. Are you able to recall how much you pay in premiums? How much coverage you've secured?

If the answer is no, experts indicate that it might be time to take a closer look at your next statement to ensure that you have the necessary level of auto insurance, as this simple investment of only a few minutes could potentially save you hundreds per year.

Anyone planning this undertaking, however, should first understand some basics about auto insurance.

In general, auto insurance is comprised of several different types of insurance that together comprise a comprehensive policy. These various forms of insurance include the following:

  • Liability coverage: This covers damage stemming from an accident for which you are responsible and is mandatory in all 50 states.
  • Uninsured motorist coverage: This covers damage stemming from an accident caused by a third party lacking the necessary coverage, and is mandatory in some states, including California.
  • First-party benefit coverage: This covers damage caused by you and you alone, and is largely optional.

Having established the core elements of an auto insurance policy, our next post will examine the ways in which adjustments to certain types of coverage could translate into major savings.

Source: Nasdaq, "Making sure you are getting the right amount of car insurance," Dec. 6, 2016

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