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How Much Car Insurance Do I Need To Buy?

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Wednesday, March 25, 2015

How Much Car Insurance Do I Need To Buy?

If you had it your way, you'd never buy auto insurance. Because it's not you that's the bad driver. It's everyone else on the road.

But accidents happen to even the best of us. You might get hit or hit someone else. Your car might get damaged in bad weather or broken into overnight. It might even get stolen. When you own or lease a car, you're bound to have some bumps in the road.

So the big question is, just how much auto insurance do you need? Here's a list of policies that will protect you from every type of car trouble you run into.

For Damage Or Injury To Another Car

Even if you're a careful driver, you will have an accident. In fact, every driver makes an accident claim at least once every 17 years. If you're to blame for the crash, and you don't have enough coverage, the burden is on you to pay for the damage.

You Need...

Liability Coverage:

These policies help pay for the cost of injury and property damage to the car you hit. Almost every state requires drivers to have a minimum amount of liability coverage, and it's separated into three categories: bodily injury per person, bodily injury per accident, and property damage. So liability coverage that's 100/300/50 means your insurance company will pay $100,000 for each person's injury, up to $300,000 for all injuries. Your insurer will also pay for $50,000 for any damage to the car.

For A Major Accident

Some states require minimum liability coverage to be as low as $10,000 coverage per person or $20,000 per accident. When you think how much car repair and medical costs can add up to, that's pretty sparse coverage. If you cause an accident with costs that go over your liability coverage, it's on you to pay the difference.

You Need...

More Liability Coverage:

If you have a high income, a house, or other big assets, you have a lot to lose after a major accident. Buy a policy that goes well above your state's minimum coverage. In case you cause an accident, and the bills are pretty high, you won't risk losing your precious assets just to pay for the damage.

For Damage To Your Car

Liability coverage helps pay for the costs of car damage and bodily injury to whoever was in the car you hit. But it won't pay for damages to your car.

You Need...

Collision Coverage:

This policy covers the cost of car repairs after an accident, whether or not you were at fault.

Comprehensive Coverage:

This policy covers the costs to replace or fix your car if it gets stolen or damaged by something other than a collision. Think of comprehensive coverage as non-collision coverage.

If you're still paying off your car loan, or you're leasing instead of buying, you have to buy both comprehensive and collision coverage. If you have an older car, the cost of full coverage (comprehensive and collision) might be more than what your car's actually worth. You might decide against getting either policy.

For Injury To People In Your Car

If an accident was your fault, you can't rely on basic liability coverage to pay for the medical expenses of anyone in your car.

You Need...

Personal Injury Protection (PIP):

Also called "no-fault" insurance, this policy covers medical expenses and lost income for you and your passengers after an accident. Not all states require you to have PIP. Plus, if you already have a health, accident, or disability policy, you might already be covered for medical costs.

For Uninsured Drivers

When the economy falls on bad times, people cut costs where they can. And that definitely includes insurance coverage. If you're the unlucky one who has a run-in with an uninsured driver, it's still on you to pay for the damage--even if you were the victim.

You Need...

Uninsured/Underinsured Motorist Coverage:

This policy helps pay for damage and injury if you're hit by someone with little to no auto insurance. It's pretty cheap, about $40 a year for $100,000 of coverage. And you can add a collision deductible waiver. So if you get hit by an uninsured driver, you won't have to pay a deductible before your insurance policy kicks in.

For Bad Luck

Your battery dies. Your car breaks down on the side of the freeway. You get a flat in the middle of nowhere. At some point, you'll get stuck in a sticky situation on the road, and you'll need help getting out of it.

You Need...

Optional Add-Ons:

You can add smaller policies onto your basic coverage package. Here are some options:

Rental reimbursement:

Also know as "transportation expense" coverage, this helps you pay for a rental car while yours is in the shop.

Roadside assistance:

It's what covers towing and labor costs if you have car trouble.

Medical payments:

It's exactly what you think. MedPay covers medical bills for you and your passengers after an accident, whether or not the accident was your fault. It's basically an add-on to Personal Injury Protection, in case medical bills are higher than what's covered under your PIP policy. MedPay is required in some states.

Customized equipment:

If you've pimped out your ride, your regular policy might not cover your fancy new equipment if it gets damaged or stolen. Customized equipment coverage can pay for your losses.

Finally, Shop Around For The Policies You Want

The auto insurance coverage you need depends on three factors:

  1. What coverage is required in your state
  2. What you want to be protected from
  3. What you can afford

Even when you know your options, deciding between policies can get pretty confusing. Get help figuring out what coverage you want! First, look up policies in your area with Insurance Clarity. Then talk to an expert. Insurance Clarity will put you in touch with a licensed agent who will give you unbiased advice on what you need. So you can get covered today!