Auto Insurance Basics

Now that you've got the new apartment, used futon, 46" plasma screen and renter's insurance, you're ready to take the next step in protecting yourself.

Auto insurance.

It's not rocket science, but there's a first time to learn everything and you can't rely on your parents to do your laundry and keep you on the auto policy forever.


Auto insurance is comprised of two parts, protecting your own car, and paying for damage you might do to other people and their cars.

The first part is protecting your own car that will get you to and from your job. Property coverage is classified as collision and comprehensive. Collision is damage cause in a....wait for it....car accident with another car or object. Comprehensive is everything else (i.e. hail storm, flood damage, etc...).  Your car will be insured for it's current value, which in most cases is a depreciated value from the original purchase price.  There will be a deductible, which is the amount of money you are responsible for before the insurance pays.  $500 is probably the standard amount and usually the most cost effective.

The second part is liabilty, which is not unlike the liability you have on your renters/homeowners policy. It pays for bodily injury and property damage you cause to others in an accident. This coverage is mandated by the state at a minimum limit.  You want to buy more than that because a lawsuit against you can affect your future salary.  Don't look for less than $300,000.  It doesn't cost much more than the minimums and it should be sufficient at this point in your life.

One last thing. Remember the renters insurance you already bought?  Try to get your auto coverage with the same insurance carrier.  Almost all of them offer discounts for combining the two.

Now you're all set....until you (or your significant other) start buying the bling. (ed. note: that's what the kids call jewelry now, right?)