Typically, it is wise to purchase enough coverage to protect both your assets and debts, in terms of both collision and comprehensive policies which may or may not be mandated by your state or auto lender.
Virtually every state requires drivers to maintain certain minimum limits of liability coverage, while beyond that minimums, you should determine what amount best meets your circumstances and preferences.
Liability Coverage
Liability coverage covers other people’s damages and expenses when you cause an auto accident that’s your responsibility. Most states mandate minimum limits of $25,000 per person injured and $50,000 total accident liability limits; furthermore, this policy typically includes medical payments/personal injury protection (PIP), which covers medical bills, lost wages and replacement services such as house cleaning or child care that might otherwise become unavailable due to injuries inflicted during an accident.
Set limits high enough to protect your assets such as your home, car and savings. Your net worth (assets minus debts) should give an idea of the maximum amount that needs to be covered with liability coverage; typically increases in $50,000 increments up to $1 million can be obtained. You could even consider purchasing an umbrella policy for additional peace of mind.
Your state and auto loan/lease agreements may specify minimum collision and comprehensive coverage requirements; however, it’s recommended that if you own your car outright or have an auto loan with low interest rates that you purchase additional coverage just in case it’s damaged in an accident, theft, or for other reasons not covered by standard policies.
Comprehensive auto policies covering fires, natural disasters and even pianos falling onto your vehicle during rooftop concerts could save money over the long haul. While not legally mandated, comprehensive policies could prove invaluable should anything unexpected occur with your car.
Your state motor vehicle department website may offer information specific to your state as well as advice on which optional types of coverage may be beneficial to add. Working with an independent insurance agent is another great way to evaluate assets and risks, understand your coverage options available and develop a plan tailored specifically to you at a price that’s within budget – you could even compare policies from multiple providers through an online broker!
Collision Coverage
Addition of collision coverage will increase your premium, but can help cover repairs to your vehicle after an accident that you cause. When considering whether collision insurance is worthwhile for you, it is essential that you estimate its worth against its cost; otherwise if your car has low value or you have sufficient savings available to cover repairing or replacing costs after an accident then collision may not be required. It is also wise to choose an amount for deductible that you can comfortably pay as this will reduce premium costs; choosing higher deductibles could potentially lower them, while simultaneously increasing premiums – making sure they are affordable should something arises that requires them in case an incident arises!
Collision and comprehensive auto insurance policies provide coverage that can assist in the repair or replacement of your car if it’s involved in an accident, helping pay the repair or replacement costs associated with such incidents. Although expensive, collision and comprehensive policies may prove useful if your older or more costly car can’t be fixed without assistance from these policies. You may even be required to have this kind of auto coverage if financing or leasing your vehicle as most lenders require such protection policies as part of any lease contract agreement.
Virtually every state requires drivers to carry at least minimum liability coverage – typically 25/50/20 coverage – which means your insurer will cover up to $25,000 for bodily injury per person injured, $50,000 per accident with multiple injuries and $15,000 property damage per incident. Unfortunately, however, these amounts often are insufficient in covering the full costs associated with an accident; medical expenses alone often surpass these thresholds while damage to other vehicles and property can quickly add up.
At minimum, it is advised that consumers purchase at least $100,000 per person and $300,000. While higher limits may be purchased voluntarily by consumers, remember to always exceed state minimum requirements when it comes to coverage.
Comprehensive Coverage
Comprehensive insurance provides coverage when your vehicle is damaged by circumstances other than collision with another car or object, such as hurricanes or earthquakes. Comprehensive plans typically offer cheaper premiums than collision policies and many drivers find the extra protection well worth their extra cost given that many are struggling financially after accidents occur.
Most states mandate drivers carry at least $100,000 per person and $300,000 per accident of bodily injury liability insurance for both bodily injury liability claims as well as property damage liability coverage. Some may also mandate personal injury protection (PIP) and uninsured/underinsured motorist coverage; most lenders also require collision and comprehensive coverage when financing or leasing vehicles.
The primary elements that influence your rates include your age, driving record, vehicle make and model, location and whether or not there have been accidents or traffic violations. Your deductible and coverage limits also have an effect – typically, higher deductibles result in lower premiums – however you should bear in mind that before insurance providers start covering claims they could need more savings up front before starting to pay out any benefits.
At its core, comprehensive coverage depends on two variables: your car’s value and likelihood that it will be stolen or damaged in ways not covered by collision coverage. If your car is only worth several thousand dollars with a high deductible and you already have collision coverage in place, comprehensive insurance may not make financial sense; however if financing or leasing your vehicle or living in an area vulnerable to weather-related events or theft makes more sense; to do this efficiently use online resources like Kelley Blue Book to determine its estimated worth or speak to local dealers about an estimate on its worthiness.
Uninsured/Underinsured Motorist Coverage
Uninsured motorist coverage (UM or UIM), also referred to as uninsured driver insurance (UID), pays medical expenses if you are injured by an uninsured driver. Some states mandate it; in others it’s optional. It can even help pay for property damage when an at-fault party doesn’t carry enough insurance to cover its entirety.
As with liability coverage, it is wise to obtain an umbrella/underinsured motorist policy with limits that match or even exceed those of your liability coverage in order to safeguard both your financial assets and give yourself peace of mind in case someone without enough car insurance causes an accident that involves you.
Increased property damage insurance may also be in order, especially if you drive an expensive car that could be damaged in a collision with less costly cars. You can typically add this coverage by paying an additional premium payment.
Personal injury protection (PIP) is another important form of coverage, providing coverage for medical expenses and lost wages resulting from an accident regardless of who caused it. PIP policies can often be included as part of your liability coverage or even sold separately as standalone policies.
If your car is worth protecting, collision coverage should also be added to your policy. This coverage helps cover repairs if an at-fault driver doesn’t carry enough auto insurance to cover damages to it.
State and lender requirements will help determine your minimum required coverage amount, but it’s also wise to customize your policy according to your personal needs and priorities. A single at-fault accident could significantly raise your auto insurance rates, so adding more coverage than required might be wise. A reliable insurance agent can explain your options and suggest what coverage best meets your needs; speak to them today in order to start finding affordable auto coverage!
