Auto Insurance Policy Overview – How Much Coverage Does an Auto Insurance Policy Provide?

Q: I am thinking of recalibrating my general auto insurance coverage. I want to know what the recommended standard coverage is and if I need to lower my policy limit so that my insurance premium goes down so I can reach my savings goal this year.

A: Your policy limit is the maximum amount the insurance company is required by law to pay under normal circumstances. If you lower the policy limit, you reduce the insurance company’s liability and increase yours. In most general auto insurance policies, the policy limit is set at the estimated value of the car, plus any additional coverage for the driver.

In general, you should have insurance coverage that protects you against third-party claims, theft, and collision damage. You can also purchase Personal Injury Protection (PIP) coverage if you want to protect the driver, but it’s not really vital if it’s not required in your state.

Ask your agent to write a general auto insurance policy for your car and then negotiate the price with him. These days, all the insurance companies are under pressure to get more buyers, so negotiating will be easier than it used to be.

Lastly, we strongly recommend that you search for more auto insurance quotes from different providers. Comparing quotes online is one of the easiest ways to lower the cost of your insurance premiums, and you might be surprised at how much money you could be saving on your coverage.