Buying Auto Insurance
In order to keep yourself without overpaying, explore the factors you should consider in putting together the right coverage for your vehicle, as well as how to select a good insurance company that will handle your claims if an accident happens. It can be confusing, but remember that taking it step-by-step makes it a much easier experience.

Accidents occurs, and when they do, insurance is what keeps our finances safe and sound. Whether an auto collision is your fault or somebody else's, your auto insurance coverage should help you. How much it helps, however, is up to you, and this is determined by the combination of options that comprise your insurance policy.

Personal Injury or Personal Liability: Always put you and your family's safety before anything else. Personal injury or personal liability coverage should be given great importance when putting together an insurance package. During accident situations, health insurance is the first thing requested by any medical facility treating you. If you don't have health insurance, load up this option with hefty coverage that will pay for any medical expenses incurred in a major accident.

Uninsured Drivers: According to an Insurance Research Council (IRC) study, if someone is injured in an auto accident, the chances are about one-in-seven that the at-fault driver is uninsured. Don't trust other drivers and don't take for granted that they will have as good coverage as you do. Though it can be hard to digest that you must pay a premium and the deductible for someone else's mistake, it's better than forgoing this coverage and risking losing your vehicle.

Major Accidents: You should never neglect the worst-case scenario when selecting insurance. What if your car is totaled and needs to be replaced? If the accident is not your fault, the other driver's insurance (or your uninsured motorist coverage) will pay for the vehicle. But there are other situations and natural calamities that can also destroy your vehicle, and in those cases, you'll only be able to rely on your own insurance. In case such a situation arises, it is better to have enough coverage to fully repair or replace your vehicle.

Getting Stranded: A vehicle is a combination of mechanical, electrical, and rubber parts. Things can go wrong at any time, and they are not always in your power to prevent. However, being prepared for those events is in your power if you add towing and rental coverage to your insurance. This might work out better than having a separate towing club membership, which could save you those annual fees.

Deductible Versus Premium
The insurance deductible is inversely proportional to the premium amount. If the deductible goes up, the premium goes down and vice versa. This relationship reflects whether you prefer to pay more or less from your own pocket before stretching out your hand to the insurer. Whichever option you choose, make sure you can afford it. Some people are better off paying a higher monthly premium in exchange for a lower deductible to avoid any large payments after an accident.

Amount of Driving Experience
Many insurance companies automatically recommend certain coverage for particular drivers. For example, if you have a teen driver at home, it is better to have good personal liability coverage with a lower deductible because new drivers are prone to making mistakes. On top of that, rates to cover teen drivers will automatically be higher because of their lack of driving experience. Try not to let the higher rates prevent you from getting ample coverage, though.

Experienced drivers with past mistakes, such as moving violations or accidents, can also have higher premiums. Defensive driving courses help to offset some of the cost, but not all of it, so drive carefully and consciously to avoid paying higher premiums later in life.

Choosing Your Auto Insurer
Choosing the right coverage is just the first step. You must also choose a good insurance company if you want to maximize the chance that your claims will be paid. Look for the following qualities when choosing your auto insurer.

Reliable and Reasonable: Insurance companies should be reliable and offer reasonable coverage for the prices they charge. In some states, there isn't much difference in price among insurance companies because of state mandates. In most states, however, companies will quote different prices for similar coverage.

Covers the Vehicle at All Times: Many small insurance companies offer low rates compared to the big ones because of their lower overhead costs. But when there is an accident and an insurance claim is filed, these small companies can sometimes be a pain. They may try to wash their hands and say, "It's not covered under your policy." That's not what you want to hear when you really need them after paying your premiums for months. Also, don't go with a local insurance company that doesn't cover out-of-state accidents.

Don't Overdo It
When you talk to any insurance agent or service provider, they are going to try to sell you more coverage so they can make more money. In general, you don't a need a high amount of coverage unless you own an expensive vehicle, drive extensively or don't have adequate health insurance. Many insurance companies are able to make easy money off of uneducated buyers who don't know what they want. By using the tips from this article, you won't have to let a smooth-talking agent steal money from your pocket.

The Bottom Line
Having ample and reliable insurance coverage is a very important component of auto ownership: You don't want to experience money problems when you are already going through the trauma of an accident. Be a smart buyer, do the proper research, compare quotes and create a package that suits both your coverage needs and your budget.

Source - investopedia.com