How Much Auto Insurance Do I Need?

Every year, there are millions of motor vehicle accidents as well as billions of dollars in property damage. This does not compare to the thousands of lives that are lost each year on the road. However, these daunting facts should only reinforce the necessity of carrying the proper amount of car insurance, as well as making safety the first priority of anyone operating a motor vehicle.

If you are in the process of buying a new or used car, talk to a variety of insurance providers. While these agents may try to oversell you on the amount of car insurance you really need, carefully consider all the facts before deciding on the right insurance policy. Remember that the law requires car insurance because it helps protect drivers and passengers against financial hardship. Choose too little and risk financial tragedy, choose too much and watch as your money goes down the drain. The smart consumer researches all of the insurance options available and makes their decision based on calculated and documented risks.

Sate minimums

Each state carries a set of car insurance minimums with exceptions in New Hampshire and Wisconsin. Most carry minimums equivalent to 25/50/15. The first of these three numbers represents the amount, in thousands that your insurance company covers s when a single motorist is injured. The second number represents the amount in which your insurance provider covers if there are multiple people injured in a collision. Finally, the last number represents the amount of property damage covered.

However, just because the state sets these minimums, does not mean you are safe carrying only these amounts. For example, imagine you are carelessly driving one day and collide with an expensive vehicle, do you think your limits can cover the damages? While there are many cars priced under $15,000, many models far exceed it. How will you pay for the damages to a car that sustains $5000 more than your limit covers?

Before you make the decision regarding the amount of limits you have on your policy, carefully weigh the pros and cons of increasing these limits. Do not risk the loss of your hard-earned net worth, when an unsubstantial increase to your premium protects you.

Comprehensive

While not required on all vehicles, it is a good idea to carry comprehensive insurance. Typically, car insurance providers require drivers to carry a minimum amount of comprehensive insurance on new vehicles. Comprehensive insurance covers damages not associated with liability insurance. For example, while liability insurance covers damages caused in collision, comprehensive insurance covers acts of vandalism and theft.

Comprehensive insurance also uses limits along with liability insurance. However, based on the value of your vehicle as well as the conditions in which you drive it, it may be wise to increase your comprehensive limits. For example, if you drive a luxury vehicle, or drive and park in unsafe neighborhoods it would be a smarter decision to spend a little more up front on increased comprehensive coverage rather than pay for it out of pocket in the end.

Uninsured motorist

Many drivers with whom you share the road each day either do not carry the proper amount of insurance, or do not carry it at all. These irregularities occur for a variety of reasons. Some drivers are unaware that their policy has lapsed, some drivers neglect to pay their premiums, and an estimated 50% of drivers are underinsured. If one of these many drivers were to hit and damage your vehicle, you may find yourself in a difficult position. If they are unable to provide ample insurance, you could always sue. However, if the driver could not afford to pay car insurance, the chances of recovering thousands of dollars from them in damages are highly unlikely.

To prevent these types of situations, it is best to carry uninsured motorist coverage. This type of insurance protects drivers from third parties who cannot provide financial reimbursement. Before choosing this type of coverage, be sure to discuss exactly what is covered. Some companies only provide medical coverage while some include property damage as well.

Latest Insurance Articles

Defensive Driving Techniques
Sadly, there were more than 40,000 auto-related deaths in 2006 and 2.6 million people with injuries from traffic accidents according to the National Institute for Highway Safety.

Glossary Auto Insurance
It is extremely important that each driver understands the fundamental basics of auto insurance before buying coverage. Know exactly what you are buying, and what your policy will include.

How to Select Auto Insurance from Quotes
In every state, there are multiple insurance carriers.