How Much Auto Insurance Coverage Do I Need?
In auto insurance there are many different types of coverage. These include bodily injury liability, property damage liability, personal injury protection, uninsured motorist protection and collision and comprehensive.
Bodily injury liability coverage is required in most states and it compensates the driver and passengers in the other car in case of an accident. This coverage also protects the passengers in your vehicle. This coverage is sold in standard increments for both how much coverage you have per person in an accident and a limit per accident.
The amount of coverage you need here is determined by what assets you have that need to be protected as this coverage is mostly for protection in law suits resulting from an accident. If you have a decent yearly income and sizeable investments you should get more coverage to protect yourself. If you rent an apartment and don’t make much money then you can get lower amounts of coverage. Your deductible here is determined by several factors including your age, marital status, driving record and where you live.
Property damage liability pays for the repair and replacement of the other person’s vehicle or property in the case of an accident. Although state minimums can be as low as $5,000, you should consider a minimum of $50,000 coverage for each automobile you own. That way if you total somebody’s Mercedes you don’t have to worry about paying it off on your own.
Personal injury protection is one coverage that you can be a little lax with. This coverage pays for the medical and funeral costs of you and your family no matter whose fault the accident was. So, if you already have health, life and disability policies you don’t really need this coverage.
Uninsured and underinsured motorist coverage does exactly what it sounds like. In the event you are in an accident with a driver that doesn’t have insurance or doesn’t have enough coverage to pay your expenses then this policy kicks in. Since there are so many uninsured motorists in American this coverage is essential. It’s also relatively inexpensive. On average, for $100,000 of coverage a year it costs $40.
Collision and comprehensive coverage is for the full cost of repairs or replacement of your car following an accident. Comprehensive covers natural disasters, vandalism and theft. Comprehensive covers actual accidents. Either way the higher your deductible the less your premium will be. So, choose the highest deductible you can afford to save money. And if you have an older car that’s paid off you might want to consider skipping this coverage altogether.
Ultimately, the amount of coverage you need is determined by the amount you can afford to pay out of pocket in the event of an accident coupled with the amount you can afford for a premium. Talk to your agent about both of these and you are sure to work out what coverage is best for you.