12 Bad Moves That Jack Up Your Car Insurance

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Don’t Buy Too Much (or Too Little) Insurance

Every state, except New Hampshire, requires drivers to carry liability insurance to cover injury and property-damage costs to others you might hit. (New Hampshire only requires you to prove you have the financial resources to cover such expenses, yet it has among the lowest rates of uninsured motorists in the country.)

Most insurance companies quote rates by default based on coverage limits higher than the law requires. That can be a good idea, since the law in most states requires only a shadow of the coverage that you may need to cover rising medical costs from a major accident. Still, it’s worth reviewing your personal financial situation and risk tolerance so you don’t pay for more coverage than you need, or wind up in a pinch after an accident. If you want more or less coverage than the insurance company quotes, just ask for a quote based on different limits.

Other types of optional insurance coverage are even more expensive: Collision insurance, which pays for damage to your own car if you cause an accident, and comprehensive insurance, which pays for damage to your car from any other type of problem. The more expensive your car, and the higher-risk an area you live in is, the more expensive these optional coverages will be.

If you have a loan on your car or if it’s leased, the bank will require you to carry collision and comprehensive coverage. Once your loan is paid off though, it’s worth revisiting how much coverage you want to keep on an older car. 

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