What Car Insurance Coverage Do I Need?

Decide how much liability coverage is enough for similar type of drivers.

How Coverage Limits Work for Car Insurance

One of the most significant considerations that people have to keep in mind when looking at automobile insurance policies is the amount of insurance coverage they should get. Getting too much coverage can lead to higher premiums, which in turn lead to people spending more money than they need to on their automobile insurance premiums. If you get too little coverage, when an accident occurs you may not be sufficiently covered and will have to pay a lot more money out-of-pocket.

Each state has minimum limits for car insurance required by law. These are called coverage limits, and they often include bodily liability insurance and property damage liability insurance coverage requirements. Outside of that, some states require a minimum amount of coverage for uninsured motorist coverage, underinsured motorist coverage, medical payments insurance coverage, and more. For people who are leasing or financing vehicles, the government does not require additional insurance above the minimum limits. Your leasing company or financing company may require a minimum amount of coverage for lease gap insurance, collision insurance coverage, and comprehensive insurance coverage, however, in the terms of the loan.

How Coverage Limits Work

Coverage limits are in place to protect people from massive expenses that they cannot afford if they get into an automobile accident. Car crashes can result in substantial medical bills, substantial property damage expenses, and death. Each of these can cost a person or their family a lot of money, and many people are not financially prepared for such a large expense in their lives. Automobile insurance policies help protect you both as a driver who caused an accident and/or as a driver who is the victim of an accident. Not all policies protect you for both. For states that just require liability insurance plans, your own medical bills or damage to your property might not be covered if you are found at-fault in a car accident.

It is essential to know that your state has minimum coverage limits in place for auto insurance, but also that many people choose to purchase additional coverage to protect themselves more. The amount of the coverage limit that you choose is the most your auto insurance company will pay out if an accident or other covered situation occurs. This means if you have $10,000 in property damage liability coverage, and $15,000 in property damage occurs, you may be responsible for paying the additional $5,000 out of pocket. The car insurance company will pay at most $10,000, leaving you responsible for the additional amount.

If you are in an accident that had $15,000 in property damage, and you have a coverage limit of $20,000, the auto insurance company will pay the entire amount after you pay your deductible. Sometimes it can be hard to predict how much auto insurance you want to get in terms of coverage limits. Fortunately, raising coverage limits above the minimum amount often does not cost a significant amount of money. The best way to determine what your costs would be at different coverage limits is to compare policies from multiple companies, including comparing multiple different coverage limits for the insurance types you are looking to purchase.

What Type Of Car Insurance Coverage Is Available?

There are numerous types of automobile insurance available, and most of them have a coverage limit that needs to be selected. Here are a few of the automobile insurance types to consider.

Bodily Liability Insurance Coverage

This insurance coverage helps pay for the medical expenses that other people incur if you are in an automobile accident and are deemed to be at fault. Keep in mind that this type of automobile insurance does not pay for your own medical expenses.

Property Damage Liability Coverage

This coverage will help pay for damage to other people’s property. If there is a repair bill that stems out of an accident, for repairs on someone else’s car, liability for property damage insurance will cover the expenses. Your own liability insurance policy will not pay for damage to your own vehicle, however. If the other person is deemed to be at fault in the accident, the other person’s liability insurance may cover your expenses.

Collision Insurance Coverage

Collision insurance coverage helps pay for damage to your own vehicle, regardless of who is at fault. They only pay up to the amount of your coverage limit, however.

Comprehensive Insurance Coverage

Comprehensive insurance coverage pays for damage or loss of your vehicle due to numerous perils. These can include theft, vandalism, falling objects, and many other weather-related perils.

Medical Expenses Coverage

This type of automobile insurance policy covers expenses related to medical care for you and your passengers that are the result of an accident. This type of coverage does not cover the medical bills of people in another vehicle, or outside of your vehicle when the accident occurs.

Uninsured Motorist Coverage

Sometimes another person is at fault in an accident, but they don’t have insurance. This can lead to messy court battles, and sometimes not getting money to help pay for your medical bills or your property damage. Uninsured motorist coverage and underinsured motorist coverage cover your expenses in this situation.

Factors To Consider When Purchasing Your Auto Insurance Limits

The biggest factor to consider when purchasing car insurance limits is how much automobile insurance coverage you will need. Many people choose to purchase more than the minimum coverage limits for automobile insurance to be further protected. Variables that can affect your decision are the age of your car, the value of your car, the amount you drive, and the area you are living in. Some coverages might not make sense if the value of your vehicle is only $1,200, as an example.

Raising the insurance limits for automobile insurance will also raise your expenses in terms of automobile coverage premiums. Another factor to take a look at is your deductible. By increasing your deductible, your car insurance premiums will go down. Your deductible is what you pay before the car insurance company makes any payments. It is essential to have a deductible that you can afford if an emergency situation occurs. Not being able to pay for the deductible can delay payments for medical expenses, payments for car repairs, and more.

How To Save Saving Money On Your Additional Coverage

Take a look at the discounts offered by your auto insurance providers, as well as possible adjustments to your deductible to save money. Also, compare rates from different car insurance services regularly.

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