Car insurance changes

Way back in the good ole' 1960s car buyers spent about 25 percent of their $8,000 median income on a new car. Today, consumers can expect to pay $27,000 for a new automobile, more than half of the median $48,000 U.S. household income. Times have changed, but has your insurance kept up?

Consider liability coverage. Today's minimum liability limits for auto insurance were established in 1967, when financial responsibility laws were adjusted to meet the increased cost of living. But while the minimums remain the same, from 1967 to 2002 the average auto damage claim increased from $241 to $2,564 nationally, and bodily injury claims grew from $1,432 to $10,138.

With such dramatic increases in costs over the years, car owners should assess whether their insurance policy meets their current financial protection needs. Increasing the liability coverage provides added financial protection with only a marginal increase in the annual premium.

"Drivers run the risk of a lawsuit if they are found liable for an accident," said Candysse Miller, executive director of the Insurance Information Network of California. "Your insurance should reflect your actual risk--the more you need to protect, the more insurance you should carry."

Car owners with substantial personal assets to protect may want to consider purchasing an umbrella policy, which provides coverage for losses above the underlying policy limits. Drivers should work closely with their insurance company or agent to determine the best possible individual policy to meet their needs.

Other adjustments may be made to an insurance policy to help reduce costs. Increasing the deductible, consolidating auto and homeowners policies with one company, and maintaining a clean driving record can help reduce insurance premiums. Drivers should also be aware that the price of auto insurance can vary by hundreds of dollars, so it pays to shop around for coverage.

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