An Insiders Guide to New York Car Insurance

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Understanding the state minimums for liability coverage:

New York state liability minimum, in insurance speak, is 25/50/10.

The first two numbers concern what your insurer will pay in the event of bodily injury resulting from a crash in which you were involved. If you have the minimum liability coverage, your insurer will pay a maximum of $25,000 per injured person, and up to $50,000 per accident to cover all related injuries.

If the cost of bodily injuries from the accident exceeds $50,000 each claim will be paid out in the order that they are received until the $50,000 limit is reached. If you were at fault, you could be sued for any bodily injury costs that were not covered by your insurance.

The final number of the liability minimum is the total coverage for property damage, in this case, $10,000.

Deductibles:

You deductible is the portion of each claim that you must pay with the balance of being paid by your insurance company.

The prevailing wisdom is that increasing your deductible will dramatically lower your premium, but this isn’t necessarily the case. There are a million and one factors that go into determining your premium – when you’re drawing up a plan with your insurance company don’t commit to a higher deductible before making sure that being on the hook for a larger portion of any cost of an accident will pay off for you in the long run.

To give you a general picture of how your premium in impacted by the deductible you choose, I spoke with a major New York insurer who put together some numbers for me.

The following chart applies to the most common New York driver: a 35-year-old married person living in a suburban area of New York driving a Honda Accord. These numbers were based on the New York minimum liability coverage.

Liability Coverage Deductible Cost per Year
25/50/10 $500 $922
25/50/10 $1000 $813

Choosing a $1,000 deductible saves you $109 a year, which only puts you ahead if you don’t report a claim worth more than $1,000 over a period of 5 years. After considering their options, most New York drivers choose a $500 deductible; very few choose something smaller.

A word on not reporting accidents: Some drivers opt for a larger deductable figuring that if they have sufficient assets on hand, they will save in the end by paying out of pocket smaller incidents – therefore avoiding the substantial rate hike they’d after reporting an accident to their insurer. It is, however, in practice not easy (or all that legal) to keep accidents a secret from your insurance company  – especially if you were at fault, there were other parties involved or the cops were notified.

Liability Coverage:

Because there are so many factors that go into determining your rate, there are very few absolutes in car insurance. However, you should almost never go with the minimum liability coverage.

Expand on the earlier table shows the rate different between opting for the state minimum against really robust liability coverage or $100,000, $300,000 per accident for bodily injury and $50,000 for property damage.

Liability Coverage Deductible Cost per Year
25/50/10 $500 $922
25/50/10 $1000 $813
100/300/50 $500 $969
100/300/50 $1000 $860

How to Compare Rates:

Whenever you compare rates, make sure that you’re comparing apples to apples.

When you call an insurance company for a quote, the first question they will always ask you is “how much are you currently paying?” Once they know your current premium, they will figure out a way to engineer a quote for less. Which sounds great, but you need to make sure you understand exactly how they arrived at that lower cost policy.

The insurer you talk with may be able to offer you a legitimately lower rate than you’re currently paying, or they might be getting to that number by increasing your deductible to above what you’re comfortable with, slashing your liability coverage or cutting off useful extras like rental or towing insurance.

If you plan to compare a number of different insurers, either decide in advance what you need in a plan in terms of liability coverage, deductible and extras and make sure that those elements go into the quote that each insurer draws up – or create a matrix of like the one above of different levels of coverage and deductible and get a quote from each insurer for every set of liability coverage and deductible.

Parting Tips:

Look For Discounts.
Insurers offer all kinds of discounts for things that make you seem like less of an accident risk. Ask your insurer if you can get a discount for:

–       Passing a defensive driving course

–       Buying both auto and homeowner insurance from one company

–       Insuring more than one car under the same policy

–       Having a car with outstanding safety features (i.e., airbags, alarms, automatic safety belts, anti-lock brakes, etc.

–       Having a child who lives more than 100 miles from where the car is garaged.

Haggle.
If you’ve done your research and are thinking of leaving your insurer for greener pastures, give them one last chance. Call them up, let them know what the competition is planning to charge and see if there isn’t something they can do to bring the cost of your current down.

Do Some Digging.
Your insurance company is more than just the rate that they give you. You want to make sure they the company you ultimately choose has a good customer service reputation, but more importantly, you need to make sure that they’re solvent enough to cover your claim when you need them. Check your potential insurer’s credit rating on ambest.com to make sure that they’re financially stable.

Figures courtesy of TSC Direct, New York Car Insurance experts.

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