Insurance

BY JOHN IZZO AND KEVIN GRENIER

FOR THE FREE LANCE-STAR

It's easy to overlook insurance in today's difficult economic times. Even though insurance is seen as a commodity, it is imperative that you get the best coverage.

You need to know how insurance works. Policyholders pay a premium to insure against shouldering the entire cost of an accident. The major forms of personal insurance are automobile, homeowners and umbrella.

AUTOMOBILE INSURANCE

Everyone is familiar with auto insurance since it's mandatory in almost every state. Highlighted below are seven tips that will help you save on auto insurance:

Be a safe driver. That's the best way to reduce your auto insurance premiums.

Shop around. Today you can compare coverage options online for several companies simultaneously.

Ask about discounts. Some insurance companies offer discounts to members of organizations and associations. Additional discounts may apply for insuring multiple cars on the same policy, having air bags, completing a defensive driving course or being a good student.

Increase deductibles. Increasing your collision and comprehensive deductibles --the amount you pay out of pocket in the event of an accident--will reduce your premium.

Drop comprehensive and collision coverage on an older car.

Reduce annual mileage.

Check your insurance before buying a new car. Some cars cost more to insure than others.

Insurance actuaries use accident statistics to project losses and determine the risk a company can take. Rates are based on driving experience, number of accidents and driving offenses, age, type of vehicle, area in which you drive and more.

Insurance coverage protects you if you injure someone or their property, get hit by another car, have an accident with an uninsured driver, or suffer vehicle damage as a result of theft, flood, fire or other natural perils. A deductible (out-of-pocket payment) usually applies.

HOMEOWNERS INSURANCE

One insurance product that is often overlooked is homeowners coverage. The standard homeowners policy provides financial protection covering the physical structure of the home including personal property, personal liability and additional costs policyholders incur as a result of a covered loss.

It is your responsibility to make sure your home is adequately protected. If you fail to maintain adequate coverage, you could be penalized in the event of a loss. The standard homeowner policy is broken down into the following components: