How to determine the amount of auto insurance coverage you need.
Car insurance is necessary to protect yourself financially if you’re ever involved in an accident. Most states require everyone to have auto insurance, and they also set minimum requirements, meaning you must carry at least a certain amount of coverage.
The minimum amount varies by state, however. In some cases, the minimum amount may be enough to cover repairs and medical expenses but depending on where you live and the type of car you drive, it may not be enough. So, how do you determine the amount of coverage you need? First, let’s review what auto insurance covers.
Car insurance includes several policies that cover different things
The main auto policies that most people must carry include:
• Liability coverage. This covers your liability if you are at fault for an accident. It helps you pay legal fees or other expenses if you are sued. The money goes to the people you hit. (It doesn’t cover the people in your car.)
• Bodily Injury Liability (BIL). This covers the medical expenses of the people in the car you hit. There is usually a maximum amount allowed, both for a single person and for multiple people. Your policy might show the amount as 10/20 or $10,000 for a single person and $20,000 for multiple people.
• Property Damage Liability. This covers damage to the car you hit. The amount is often listed with your BIL coverage as 10/20/10, meaning the maximum amount allowed for repairs to the other car is $10,000.
• Other types of policies (which might be optional) include:
• Personal Injury Protection (PIP). This covers you and your passengers’ medical expenses.
• Uninsured/Underinsured Motorist Coverage. Covers your costs if you’re in an accident with someone who doesn’t have insurance or who only has minimal coverage.
• Collision. This covers repairs to your car after an accident.
• Comprehensive. This covers the costs if your car is stolen or damaged by something other than an accident (e.g., a tree branch falls on your car or damage from flooding or a storm.)
Why you might need additional auto insurance coverage
Depending on where you live, or the car you drive, the maximum amount your policy will allow may not be enough to cover all your expenses. For example, your state might require owners to carry 15/30/5 of coverage.
Determining how much coverage you need
Many factors go into deciding both the types of coverage to purchase and the coverage amounts. It might come down to your assets and whether you can afford to pay out-of-pocket expenses. It is a good idea consider the total value of your assets and make sure your coverage is the same value.
Do you need additional policies?
When it comes to optional policies, you’ll need to factor in a few things. Make sure there will be no overlapping with your current insurance policies, you don’t want to pay more than you need. Another thing to consider is that if you have a good health insurance policy, you may not need more than the minimum for personal injury protection.
If you live in a state that has a high percentage of uninsured drivers, you would be wise to consider purchasing some additional coverage. Collision and Comprehensive coverage will help replace or make repairs to your vehicle if you’re at fault in an accident. There are deductibles you have to meet, but if your car is new or a luxury vehicle, it might be worth it to have this coverage.
A savings tip to follow
One way to lower your auto insurance premium is to choose a higher deductible and then pay for minor things on your own. You can always choose not to submit a claim for smaller repairs and use your collision insurance only when major repairs are needed. This will help keep your insurance rates from increasing.
Use this helpful advice to determine how much auto insurance coverage you need. If you have questions or need to purchase auto insurance, contact Avante Insurance Agency. Whatever type of auto policy you need, we will get you covered. Call today at 305-648-7070 or send us a message through our online form.