by Lucinda Davis

Created on: July 08, 2009   Last Updated: July 09, 2009

When buying insurance you are investing in your fears or what "might" happen. Insurance companies exploit our fears and that uncertainty in our lives. The agents will attempt to sell several kinds of automobile coverage. Many people purchase too much insurance that is not needed because you simply don't know what to buy. Insurance is guaranteed money lost unless of course you have a tragedy in your life.

Car insurance is there to protect you from serious financial loss. However, car insurance will be one of your biggest financial expenditures over your lifetime. If you understand your insurance and what you need you can save at least 25% or more.

To start with always compare prices or shop around for better prices. Rates will vary from company to company and a lot people don't even bother to get even one other quote. The companies that seem to have the lowest rates are Geico, State Farm, and Liberty Mutual. Still, you should check out as many companies as possible.

Whenever possible, before you purchase your car you should call the insurance company to find out how much your insurance will be. Rates vary from car to car. If you are purchasing a more expensive car then it would follow you will pay more for insurance. Some cars survive the crash tests better so those cars would potentially save you money on insurance. You will need the vin number which is found on the driver's side on the dash.

You don't ever want to file small claims. You insurance company will increase your rates the following year possibly as much as 30% if you file a couple of claims in the previous year. If your damages are less than $600 it might pay to front the costs yourself. Do the math and see if it's worth it.

Another way you can save money and probably the easiest way is to raise your deductibles. You can save about $300 a year or more just by telling your agent to make your deductible higher. The deductible is the amount you will pay out of pocket before the insurance will pay a dime. For example if you get into an accident and your deductible is $500 but the repairs will cost $1000 then you pay $500 and the insurance pays $500.

Property damage liability is only necessary when the accident is your fault. If you are a safe driver then this is not likely going to be used. Calculate your net worth and multiply that by two. This is the amount of coverage you will want. If your net worth is more than $50,000 you will only want to carry a maximum of $50,000 in coverage.

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