Insurance 101

How to protect yourself, and your investment

Ugh--insurance! The only thing worse than paying for it is not having it when you need it.

Simply put, insurance is the price you pay to protect yourself, your passengers, and your vehicle against unexpected losses. It is required by law, and if you've ever insured a vehicle, you know it makes up a formidable portion of your total ownership expense. Unlike depreciation, insurance is a very visible expense--your insurance bill is a regular visitor to your mailbox.

Although you pay a single vehicle insurance premium, you're actually protecting several entities: your vehicle (the collision and comprehensive part of your bill), and yourself and others (the bodily injury and property damage portion).

In most cases, where you live and the type of vehicle will determine the price of your collision and comprehensive coverage. The price of your bodily injury and property damage coverage (also known as "liability" coverage) depends on your driving record, as well as who you are, where you live, and how much you use your vehicle.

Vehicle insurance is expensive even though enhanced vehicle safety, a drop in thefts, and fewer drunk driving incidents have helped lower premiums in recent years. But by shopping around, eliminating coverage you don't need, and by getting no more than necessary protection, you may be able to trim your premium by hundreds of dollars.