Choosing The Right Auto Insurance: Key Values To Consider

Auto insurance is a tricky business. While it's mandatory to have a minimum amount of auto insurance coverage in almost every state, it's also important to consider your own financial situation when deciding how much insurance to get. The right amount of insurance coverage will provide financial protection in case of an accident, without costing you a fortune in premiums.

The main component of car insurance is liability coverage, which covers the medical expenses and property damage of others if you cause a crash. However, the amount of liability coverage required varies by state, and it's important to make sure you have enough coverage to protect your assets in case of an accident.

In addition to liability coverage, there are several other types of optional coverage to consider, such as collision and comprehensive coverage, which cover damage to your own vehicle. It's also a good idea to look into optional coverage types like uninsured motorist coverage and personal injury protection, to make sure you're covered in any specific scenarios that concern you.

When deciding how much auto insurance to get, it's important to consider your net worth, how much you drive, and the value of your vehicle. It's also a good idea to shop around and compare rates from multiple insurance companies to make sure you're getting the best deal.

Liability insurance

When selecting liability insurance, it is recommended to opt for higher coverage limits to adequately protect yourself. The recommended coverage is $100,000 per person and $300,000 per accident for bodily injury liability, along with $100,000 for property damage liability. These limits ensure that you are not left with overwhelming financial burdens if you cause an accident with multiple injuries or significant property damage.

While liability insurance is a mandatory requirement in most states, the specific minimum coverage limits vary. It is essential to be aware of your state's requirements and ensure your policy meets or exceeds them. However, it is worth noting that state minimums might not be sufficient to cover all expenses in the event of a major accident, so consider your needs and choose coverage limits accordingly.

In addition to the standard liability coverage, you can also opt for additional types of liability insurance, such as uninsured and underinsured motorist coverage, which will protect you if you are hit by a driver who does not have sufficient insurance. Personal injury protection (PIP) is another valuable addition, as it covers your medical expenses and lost wages regardless of who is at fault.

When deciding on liability insurance coverage, it is important to consider your net worth. Ideally, you should aim for coverage limits that match or exceed your net worth, providing comprehensive protection in the event of a lawsuit.

Collision insurance

• Any collision or crash you cause on public roads as a driver.
• Collision with other objects as well as cars.
• An accident caused by another driver which affects your vehicle, if they don't have adequate insurance coverage to pay.
• Your car being damaged by rolling over.

It is important to note that collision insurance does not cover the injuries of other drivers, theft, or accidental damage due to fire or extreme weather. These instances may be covered by other types of insurance, such as liability or comprehensive insurance.

When deciding whether to purchase collision insurance, consider the value of your car and your ability to pay for repairs or replacement in the event of an accident. If you can't afford to replace your car without insurance, collision insurance may be a good idea. However, if your car is older and has a low market value, collision coverage may not be worth the cost.

The cost of collision insurance can vary depending on factors such as the car you drive, how many miles you drive, and where you live. You can also choose a higher deductible to lower your premium, as long as you can cover the out-of-pocket costs if you need to file a claim.

Comprehensive insurance

The cost of comprehensive insurance varies depending on factors such as the age and value of your vehicle, where you live, and theft rates in your area. According to the National Association of Insurance Commissioners (NAIC), the average premium for comprehensive coverage was approximately $168 in 2018. However, this amount may be higher or lower depending on your specific circumstances.

When deciding whether to include comprehensive coverage in your auto insurance policy, consider if you can afford to repair or replace your car if it is damaged or stolen. If you can't, comprehensive coverage can provide financial protection, but it may not be worth the added expense if the cost of the premium and deductible exceed the value of your car. On the other hand, if the cost of your premium and deductible is significantly less than the value of your car, adding this protection may be a wise decision.

Uninsured motorist insurance

Uninsured motorist coverage consists of two main components: uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). UMBI provides compensation for medical expenses incurred by you and your passengers due to an accident with an uninsured driver. Without this coverage, you may be held responsible for paying your own medical costs. In contrast, UMPD covers repairs to your vehicle if it is damaged by an uninsured motorist. If your policy does not include UMPD or collision coverage, you may have to pay for car repairs yourself or file a claim against the at-fault driver in court.

In addition to uninsured motorist coverage, you may also want to consider underinsured motorist (UIM) coverage. UIM protects you from at-fault drivers who have insufficient insurance to pay for the injuries or damages caused in an accident. Like UM coverage, UIM is divided into bodily injury and property damage categories.

When deciding on the amount of uninsured motorist coverage to select, it is essential to consider your financial situation and the value of your vehicle. For UMBI, you may want to choose limits that match your liability coverage. As for UMPD, you can select a limit close to the value of your car, especially if you do not have collision coverage.

Overall, uninsured motorist insurance provides valuable protection in the event of an accident with an uninsured or underinsured driver. By understanding the components and considering your specific needs, you can make an informed decision about the level of coverage that is appropriate for your situation.

Personal injury protection

PIP insurance can help cover medical expenses for you and your passengers after a car accident. It can also help pay for your health insurance deductible. If you are injured in an accident and are unable to work, your PIP coverage can help replace lost wages. This benefit also applies if you are self-employed and need to hire temporary workers to perform tasks.

In addition to medical and lost wage coverage, PIP can assist with funeral, burial, or cremation expenses following a car accident. If you pass away in an auto accident, your PIP insurance can help replace your lost income for your surviving dependents. PIP insurance can also help pay for services that you would normally perform if you were not injured, such as childcare and housecleaning.

While PIP offers comprehensive coverage, there are some exclusions. For example, PIP will not cover the injuries of other drivers in a collision or any injuries sustained while you were committing a crime, such as fleeing the police. It also does not cover injuries sustained while you were being paid to drive.

The requirements for PIP coverage vary from state to state. In some states, such as Texas, PIP insurance is not mandatory, but you must sign a waiver if you choose to decline the coverage. In other states, PIP coverage is mandatory for all drivers. It is important to review the specific requirements for your state to ensure you have the necessary coverage.

When determining the amount of PIP coverage to select, consider factors such as the cost of medical care, your income, and the likelihood of needing replacement services. It is generally recommended to choose higher coverage limits if you can afford to do so, as this provides greater financial protection in the event of an accident.

Frequently asked questions