How Much Car Insurance Should You Buy?
by: Erick Pace
Car insurance is one of the most dreaded chunks in your budget.
And depending on which state you live in, it could be a smaller
or larger chunk of your budget than your neighbors across state
lines.
How much insurance should you buy? Any insurance agent worthy of
their salt will tell you that you should buy as much as you can
afford. While this is a good rule of thumb, it's about as useful
as a stock broker's tip to buy low and sell high. It might be
sound logic but it doesn't get you any closer to an educated
decision. There are a few filters that need consideration in
order to make that educated decision. First, what is the state
required minimum coverage where you live? Second, what does the
minimum cover? Third, what other coverage is available and can
you afford it? And fourthly, what are you protecting?
What do the minimums cover?
Now that you know what your state requires, what are you actually
covered for once you purchase the minimum? Using the coverage
definitions that follow, find the types of coverage required and
see what your state says is the accepted minimum.
Coverage Definitions
Bodily Injury Liability
Covers other people's bodily injuries or death for which you are
responsible. It also provides for a legal defense if another
party in the accident files a lawsuit against you. Claims for
bodily injury may be for such things as medical bills, loss of
income or pain and suffering. In the event of a serious accident,
you want enough insurance to cover a judgment against you in a
lawsuit, without jeopardizing your personal assets. Bodily injury
liability covers injury to people, not your vehicle. Therefore,
it's a good idea to have the same level of coverage for all of
your cars. Bodily Injury Liability does NOT cover you or other
people on your policy. Coverage is limited to the terms and
conditions contained in the policy.
Comprehensive Physical Damage Coverage
Covers your vehicle, and sometimes other vehicles you may be
driving for losses resulting from incidents other than collision.
For example, comprehensive insurance covers damage to your car if
it is stolen; or damaged by flood, fire, or animals. Pays to fix
your vehicle less the deductible you choose. To keep your
premiums low, select as high a deductible as you feel comfortable
paying out of pocket. Coverage is limited to the terms and
conditions contained in the policy.
Collision Coverage
Covers damage to your car when your car hits, or is hit by,
another vehicle, or other object. Pays to fix your vehicle less
the deductible you choose. To keep your premiums low, select as
large a deductible as you feel comfortable paying out of pocket.
For older cars, consider dropping this coverage, since coverage
is normally limited to the cash value of your car. Coverage is
limited to the terms and conditions contained in the policy.
Medical Payments
Covers medical expenses to you and your passengers injured in an
accident. There may also be coverage if as a pedestrian a vehicle
injures you. Does NOT matter who is at fault. Coverage is limited
to the terms and conditions contained in the policy.
Uninsured Motorist Coverage
Covers bodily injuries to you and your passengers when the other
person has no insurance or not enough insurance in a crash that
is not your fault. In some states, there is also uninsured
motorist coverage for damage to your vehicle. Given the large
number of uninsured motorists, this is very important coverage to
have, even in states with no-fault insurance. Coverage is limited
to the terms and conditions contained in the policy
Personal Injury Protection Coverage
Covers within the specified limits, the medical, hospital and
funeral expenses of the insured, others in his vehicles and
pedestrians struck by him. The basic coverage for the insured's
own injuries on a first-party basis, without regard to fault. It
is only available in certain states.
Property Damage Liability
Covers you if your car damages someone else's property. Usually
it is their car, but it could be a fence, a house or any other
property damaged in an accident. It also provides you with legal
defense if another party files a lawsuit against you. It is a
good idea to purchase enough of this insurance to cover the
amount of damage your car might do to another vehicle or object.
Coverage is limited to the terms and conditions contained in the
policy.
Rental Car Reimbursement
Covers renting a car if your car isn't drivable or while your car
is being repaired because of a covered accident.
What else is available and can you afford it?
Did you come across a coverage and think, "I need that but it
isn't required by state law" when you were reviewing the coverage
definitions? Chances are you did. Can your budget afford the
additional expense of these protections? Or maybe more to the
point; can you afford NOT to have these additional protections?
At CarInsurance.com it's easy to get multiple quotes all with a
click of your mouse. And during the quoting process, it's simple
to add or remove coverage to see how additional coverage will
affect your budget.
What are you protecting?
What assets need to be protected from being plucked away if you
cause injury or damage?
Your car itself. If this is a significant asset, or at least the
bank you owe money to thinks so, then you will need comprehensive
and collision.
Your net worth. Do you have an enormous net worth to protect. If
so, either get it out of your name and into a trust or buy all
the insurance you can. If you have little or nothing to protect,
then you can get by with less and still be financially
responsible.
However, after you determine how much protection to get, always
ask how much more it is for the next level higher. Very often,
you can get significantly more coverage for very little cost.
Car insurance isn't flashy. There is no "wow" factor and the
opposite gender isn't going to be impressed by the size of your
policy. But not having enough can be the difference between
financial stability and financial ruin. For what its worth,
CarInsurance.com finds financial stability incredibly appealing.
Visit http://www.carinsurance.com
for online auto insurance
quotes.
Erick Pace is a representative of CarInsurance.com. You can visit
CarInsurance.com at http://www.carinsurance.com or contact them
at 1-877-327-8728.
CarInsurance.com's online insurance marketplace gives an
opportunity to consumers and to insurance companies. We offer the
ability to shop for car insurance online.
Consumers can receive quotes from many insurance companies, in
some states you are able to purchase your insurance instantly,
online. You don't have to drive your car to buy car insurance.
Buy online...anytime!
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