The first question is to be sure what cover you need. No matter whether you live in an at-fault or no-fault state, you have a choice on how much cover to buy. You could go with the minimum or look for cover on a wide range of different risks with generous maximums, sufficient to meet most of the losses you might sustain. In part these choices will be determined by your financial status. If you have enough money available, there’s no reason to take unnecessary risks. You buy enough insurance to protect all your interests. But if money is in short supply, you are in the market for cheap car insurance. This means hitting the legal minimum mandated for your state and then adding whatever seems affordable (and wise). If you are in the borderland, one way to look for savings is in the detail of what’s included in the cover. So, for example, some collision policies assume you want every last element of loss covered. But you may decide you don’t want to cover the cost of towing your vehicle from the scene of an accident or for storing it in a secure location while waiting for repair. Perhaps you have a second vehicle and don’t need to cover the cost of renting an alternate. By unbundling all the components in the cover, you can often save money by eliminating those you can pay for out of your own pocket.

This naturally leads to the question of the deductible. Although it may seem odd that you should be allowed to insure yourself for the first slice of any claim, the mandate is only interested in confirmation a minimum amount of cover is guaranteed. So long as you have the money available, this is a reasonable way of trading down to the cheap car insurance rates. But never forget the risk of two accidents close together. You may have enough saved or available on your credit card for one accident. What happens if there’s a second? From the insurance company’s side, the answer is simple. If you don’t pay, it need not pay a cent. This leaves you in a deep financial hole.

Finally, look at the definitions of the risks covered and the list of the events excluded. Cheap car insurance usually means you get less cover for your premium dollars. The limitations can catch you out. For example, if you live on a flood plain and your cheap car insurance excludes damage due to flooding, where are you going to put your vehicle when it rains? The small print can hide a number of problems and unless you take the time to check through, you can find you paid for a policy that fails to cover you in the more common situations you face. This is all perfectly fair. If you choose not to read the policy you can’t complain if you buy something that doesn’t help you.