Automobile Insurance AZ and Required Coverage

Why Do We Need Insurance?

With the economy being what it is, and many people paying more attention to their budgets and looking for ways to reduce their monthly payments, car insurance often comes to mind as a place where monthly reductions can be made. Many often wonder why we need car insurance in the first place.

The first reason is that in order to register a vehicle in the state of Arizona, you must have proof of financial responsibility in the form of a bond, a certificate of insurance, or certificate of deposit or cash in the amount of forty-thousand dollars ($40,000). Obviously, for most people, a certificate of insurance is the most likely option.

The other reason we need to have automobile insurance is to be covered in the event of an accident. You may think you are a defensive driver, and so the likelihood of this happening is small, but you have no control over everyone else on the road. If you get in an accident and do not have insurance, this may result in thousands of dollars worth of damage. If you have automobile insurance, you will end up paying a small deductible - maybe $100 or $500 - to have your car fixed. The alternative is paying thousands of dollars out of your own pocket. This could be disastrous if you are still paying for automobile financing.

What Kind of Coverage is Required?

The reasons for having automobile insurance are valid, so what can one do to be adequately covered in case of an accident, but also not spend more than necessary? In the state of Arizona, the required coverages are Property Damage and Bodily Injury. The minimum required limits are $30,000 per accident for Bodily Injury and $15,000 per person and $10,000 per accident for property damage.

So, is there any way to reduce what we're already paying, or do we need to look elsewhere in our budgets to find reduction opportunities? The answer is that, yes, there are opportunities to reduce your monthly premiums. One way to reduce your premiums is to take advantage of the discounts offered by your insurance carrier. Some of the discounts that insurers offer are accident free drivers discount; a discount for insuring your home and auto together with the same insurer; multiple auto discount; good student discount; multiple auto discount; nonsmokers discount; and passive restraint discount (for vehicles with airbags or automatic seatbelts). In addition, you might consider larger deductibles for your collision and comprehensive coverages.

Collision and comprehensive coverage is not required, however. Of course, you will want to evaluate carefully your own personal driving habits, such as your history of fender benders and the area in which you live and drive on a daily basis. If you live in a congested area, or have a long commute on a treacherous winding road, then you should get more comprehensive coverage. If you drive an older car and have a good driving record, then you may not even want to get collision coverage.

Even though there are certain requirements for automobile insurance coverage in Arizona, keep in mind that there are ways to reduce your monthly premium. The key is to take the time to look at your situation and all the different aspects of your current coverage in order to explore reduction opportunities.