Recommended Levels for Your Auto Insurance

Author:

There are so many types of auto insurance available from thousands of companies that it can be overwhelming to choose the right coverage. You need to have enough coverage in order to be protected in an accident. However, you don’t want to pay more for coverage that you don’t use.

Take a look at this breakdown of auto insurance types to learn how you can get the best coverage to keep yourself safe and not overpay.

Remember that the minimum coverage requirements of each state are more important than any recommendations. If you are having difficulty finding the minimum coverage required by your state, your auto insurance company can help you find them. To drive your car, you must have at least this amount of auto insurance.

Bodily coverage

The body coverage sub-category is liability insurance. It covers medical expenses incurred by the other party in an accident involving your automobile. It can protect you against claims for medical expenses as well as emotional suffering, funeral costs and lost wages.

ALSO READ  Reduce Your Business Risk

Medical expenses can quickly add up and become prohibitively expensive. You run the risk of losing your assets and being sued if you don’t have enough bodily insurance. Automobile injuries are not cheaper if your car is worth more than it is. Therefore, your bodily coverage should be determined based on your personal financial protection and not the vehicle’s value.

The minimum amount of coverage is generally $100,000 per person/$300,000. You will need to increase your coverage if you have substantial personal assets, such as a house, investment portfolio or inheritance.

Property Damage Insurance

Property damage coverage is a sub-category in liability insurance that covers damage to vehicles, buildings and other property resulting from an accident in which you are found responsible.

You will not be able pay the costs of repair or replacement costs if you’re in an accident with a costly vehicle. Proper property damage coverage is essential to protect your personal assets against being taken over by the other party. Your total worth should determine your minimum coverage. Your coverage should be greater than the sum of all your assets. You will need at least $100,000 for property damage coverage.

ALSO READ  What We Can Learn About Love From French Women

Collision Coverage

Collision coverage covers the costs of repairs or replacement of your vehicle after an accident in which you are responsible. The current market value of your vehicle should determine the coverage amount. You will need to talk with your lender if you have not yet paid off your car loan.

It may not be a good idea to keep this coverage if your car’s value is lower than the premiums for auto insurance (a guideline is $2,000). If your car is in an accident and it gets damaged, you’ll be responsible for the repair or purchasing a new vehicle.

Comprehensive Coverage

This type of auto coverage covers only your vehicle. This type of auto insurance covers you for accidents that do not involve other vehicles (e.g. hitting a deer), theft, fire damage or vandalism.

After you have considered the state minimum requirements for comprehensive coverage in your state, make sure to check with your auto loan lender to confirm that they also have a minimum comprehensive requirement. Beyond these minimums the best coverage amount is determined by the value of your car and how much you can afford to pay for it.

ALSO READ  How Temporary Auto Insurance Can Work For You

If your car’s total value is less than your premium amount and your car is your own, you can choose not to have this coverage. (Are you still unsure? You should only drop comprehensive coverage if the vehicle’s value is less than $1,000. Consider how much you would pay for repairs and replacements if your vehicle was worth more than $1,000. Everybody is vulnerable to having to file a comprehensive insurance claim due to circumstances beyond their control. Paying low for comprehensive coverage now could save you from a major financial emergency down the road.

Personal Injury Insurance

You can get personal injury coverage to cover certain medical expenses as well as pay for lost wages in the event of an accident. It does not matter who is at fault. In many states that do not have a fault system, it is required.

Ask your insurance company if they will cover medical expenses incurred in an accident. Personal injury coverage is often unnecessary because they will usually cover you.

ALSO READ  Love is in the Air?

Personal injury coverage can be advantageous in the case of lost wage reimbursement. This insurance is particularly important for those who have families to support or are most likely to be absent from work due to an accident. A broken leg might not result in a receptionist missing more than two days of work but could cause a limousine driver to be absent for several weeks. Teenagers and retirees will not need to be reimbursed for lost wages.

Compare your current income to the additional costs of getting enough personal injury coverage. Even if the cost isn’t prohibitive, personal injury coverage may prove to be very beneficial if you are injured in an auto accident. Personal injury coverage would be required by most people to cover at least $10,000 per person.

Uninsured/Underinsured Motorist Coverage

This coverage covers expenses incurred when you are involved in an accident that is caused by someone who has no or too low insurance. This coverage is essential, as there is no way to stop such an accident from happening.

ALSO READ  Discount Dental and Vision Plan - Find Out How to Save a Bundle of Money Without Health Insurance!

You shouldn’t assume that the costs of your lawsuit against an uninsured motorist will be covered. Legal actions can take some time. If your car is too damaged or totaled to drive, you will need to have the payments covered immediately. It is unlikely that the other party responsible has enough insurance to cover your expenses even if they are ordered by a court.

Consider that you could be injured and your vehicle may suffer damages when you choose the coverage amount. Your car may also have been damaged by passengers. You don’t want to choose a limit that covers only the cost of repairs. The minimum amount is generally $100,000 per person/$300,000.

Rental reimbursement coverage

If your car is damaged or stolen, this coverage will pay for the rental of a car. The rental period is limited to a maximum of 7 days and a daily maximum.

You don’t need to rent a vehicle if yours is out of commission. If this is the case, then you should not choose this coverage. Rent reimbursement coverage is usually only a few bucks more than your premium so it’s a smart idea to choose it.

ALSO READ  How to Save on Car Insurance: Smart Ways to Lower Your Rate

Towing coverage

This coverage covers all costs related to an accident, including towing. Towing coverage can also be included depending on the policy. This covers you if your vehicle is damaged, runs out of fuel, or stops.

Many people have similar coverage already from their auto dealers or auto clubs. If you have already received towing coverage from another source, don’t sign up for this coverage. If you don’t have towing coverage, the extra cost is worth it for safety and peace-of-mind.