Haris Ashley
Auto insurance coverage amounts vary depending on factors such as state requirements, personal needs, and budget. While each state has its own minimum insurance requirements, these are often not sufficient to cover all potential costs in the event of an accident. It is recommended to have at least $500,000 worth of liability insurance, which covers medical or repair costs for others if you are at fault in an accident. Additionally, comprehensive and collision coverage are important to protect your own vehicle from accidents, theft, or natural disasters. When choosing a deductible amount, it is essential to consider your budget, driving habits, and the value of your car. A higher deductible can lead to lower premiums, but it is crucial to ensure that you can afford the out-of-pocket expenses in case of an accident.
| Characteristics | Values |
|---|---|
| Liability Insurance | $500,000 |
| $100,000 per person | |
| $300,000 per accident in bodily injury liability | |
| $100,000 per accident in property damage liability | |
| $50,000/$100,000, $100,000/$300,000, $250,000/$500,000 or higher | |
| Comprehensive Coverage | $100, $200 (standard), $250, $500 and $1,000 deductibles |
| Collision Coverage | $100, $200 (standard), $250, $500 and $1,000 deductibles |
| Uninsured Motorist Coverage | $250,000 per person per accident and $500,000 per accident |
What You'll Learn
Liability insurance
While state minimums tend to be low, it is recommended that drivers purchase higher coverage limits to adequately protect their assets in the event of a lawsuit. For example, if you cause an accident that results in $100,000 in medical bills and your policy limit is 25/50/25, your insurer will only pay $30,000, leaving you responsible for the remaining $70,000.
Therefore, it is generally advised to purchase liability insurance with coverage limits of at least 100/300/100. If you can afford higher coverage, it may be worth considering, especially if you have a lot to lose in a potential lawsuit.
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Collision insurance
When choosing collision insurance, it is recommended to consider the cost of the car, its potential repair costs, and one's willingness to pay for repairs under the deductible amount. Collision coverage can be expensive, but people can save on premiums by opting for a higher deductible, such as $500 or more.
While collision insurance is not legally required in most states, it is an essential component of full coverage, along with liability and comprehensive insurance. It provides financial protection in case of accidents and gives peace of mind while driving.
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Comprehensive insurance
- Weather events, such as hail, floods or tornadoes
- Falling objects, such as tree limbs
- Animal collisions, such as hitting a deer
- Car theft and broken windows
- Vandalism or civil disobedience, such as a riot
The cost of comprehensive insurance varies depending on factors such as the state where you live, the value of your vehicle, and your driving record. According to the National Association of Insurance Commissioners, the average annual comprehensive insurance premium for drivers in the U.S. in 2019 was $171.87.
When deciding whether to purchase comprehensive insurance, consider the value of your car and whether you can afford to repair or replace it if it is damaged or stolen. Comprehensive insurance may be worth it if you would have difficulty covering the costs of repairs or replacement on your own.
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Personal injury protection
In the US, 13 states require PIP to cover medical expenses, and in some states, it is optional. In Texas, for instance, PIP insurance is not mandatory, but you have to sign a waiver if you want to decline the coverage.
PIP coverage usually includes:
- Medical costs, including surgeries, X-rays, dental or eye treatments, medical procedures, prosthetic devices, and professional nursing.
- Rehabilitation therapy.
- Lost income resulting from the accident.
- Replacement of necessary services, such as childcare or lawn care, if the accident left you unable to take care of your children or perform household tasks.
- Funeral, burial, or cremation expenses after a car accident.
PIP does not cover the other driver's injuries in a collision or any injuries from an accident that occurred while you were committing a crime or being paid to drive.
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Medical payments coverage
The coverage limits of MedPay typically range from $1,000 to $10,000, and it is generally recommended to carry coverage equal to your health insurance deductible. If you do not have health insurance, a higher MedPay limit is advisable to help cover potential medical expenses.
While MedPay is not offered in every state, it can provide valuable financial protection and peace of mind, especially if you are unsure about your ability to afford medical bills after an accident. In states that do not offer MedPay, personal injury protection (PIP) coverage is usually available as an alternative.
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Frequently asked questions
The recommended coverage amount for liability insurance is $100,000 per person and $300,000 per accident in bodily injury liability, and $100,000 per accident in property damage liability. This is often written as 100/300/100.
Uninsured/underinsured motorist coverage is required by law in some states. In other states, it is optional but can provide valuable protection if you are in an accident with a driver who does not have insurance or has insufficient coverage.
A deductible is the amount you pay out of pocket when you file a claim. For example, if you have a $500 deductible and your repair costs are $2,500, you will pay the mechanic $500, and your insurance company will cover the remaining $2,000.
The amount of auto insurance coverage you need depends on various factors, including your state's minimum requirements, the value of your car, and your budget. It is recommended to have at least $500,000 worth of liability insurance and consider additional coverages such as comprehensive and collision insurance to protect yourself financially in case of an accident.
