How to decide your required auto insurance coverage
Do you think that you don’t need to purchase auto coverage as you drive very carefully? Even if you are an excellent driver, there may be someone on the road who doesn’t drive carefully. So, you need to purchase adequate Auto insurance coverage so that the insurer covers your financial losses in the event of an accident. In addition to this, most of the states require you to purchase a basic auto insurance policy.
Types of auto insurance coverage
Following are the types of auto insurance coverage usually offered by the insurance companies.
- Property damage liability – If you go for this auto coverage, then your policy will cover the losses when your car is responsible for damages caused to another car or other property (such as, a house, a fence, etc.).
- Bodily injury liability – It means that you’ll get protection if you or your family members are responsible for someone’s bodily injury. You’ll also get legal defense if the other party files a lawsuit.
- Personal injury protection – In the event of an accident, along with covering the cost of treatment of the passengers and the driver of the policyholder’s car, this policy will also cover the lost wages of the injured persons.
- Comprehensive coverage – If you purchase this auto coverage, then the insurer will cover the losses caused by a natural disaster.
- Collision coverage – This coverage compensates for damage to your car when it collides with another vehicle or any other object. It covers the repairing cost even if you’re at fault.
- Underinsured/uninsured motorist coverage – It means that the policy will cover the losses if an underinsured/uninsured person hits you or any of your family members. You’ll also get coverage if a car hits you on a road.
Required auto insurance coverage
Go through this section to know how to purchase the required auto coverage.
- Liability coverage
You need to purchase minimum liability coverage as outlined by your state. For example, as of January 2010, the liability minimums in the state of Arizona are 15/30/10. So, in Arizona, the minimum coverage requirements are 15,000 USD of bodily injury liability for one person, 30,000 USD of bodily injury liability for all people and 10,000 USD of property damage liability for an accident.
However, it is advisable that you purchase higher liability coverage limits for your policy. This is because, if someone else gets injured in the accident and you are at fault, then the state minimum coverage will not cover the medical expenses. In such a situation, the other person’s attorney may go after your valuable assets to cover the costs.
- Collision and comprehensive coverage
You should purchase relatively higher collision and comprehensive coverage if you drive an expensive car than a person who drives an old vehicle.
- Underinsured/uninsured motorist coverage
You should also purchase underinsured/uninsured motorist coverage even if you already have full medical coverage. This is because the underinsured/uninsured motorist coverage covers up the losses that a health insurance doesn’t cover. As for example, this coverage pays for the lost wages (for the period you are unable to work) when you are hit by a car on the road.
- PIP coverage
You can drop PIP (Personal Injury Protection) coverage if you already have separate disability and health insurance policies. So, before purchasing the coverage, go through the terms and conditions of other policies and if required, consult with an insurance agent so that you don’t end up paying for the coverage that you don’t need.
However, it is advisable that you don’t drop any auto coverage (that you require) simply to reduce the premium cost of your policy. Instead, you can choose a comparatively high deductible or buy multiple insurance policies from the same insurance company. Both these strategies may help you to reduce the premium cost to some extent without compromising on the required coverage.
Useful Resources:
Auto Cars News – Visit the site to get the current information on auto and cars industries.