How much auto insurance does one really need? If you have ever looked at an insurance company website or talked to an insurance salesperson on the phone then you know that there is a long list of car insurance products just waiting for you. You may be wondering, “How much car insurance do I need?”
In a perfect world where money is no option, you could benefit from every single policy on the market. It is better to be safe than sorry, isn’t it? However, that’s not a very practical method for most of us. Some of the insurance policies you find, despite the protective services offered, are simply a waste of money.
Make it a point to research each policy your company (or agent) offers, and determine for yourself if the policy could actually save you a lot of money in the event of an accident. In fact, why not compare auto insurance policies from many different auto insurance companies to find the one that is best for you? Enter your zip code above to start comparing car insurance today!
Why Do You Need Car Insurance?
Isn’t insurance like a form of gambling? Aren’t you playing the odds, guessing what damages might or might not happen to your car? A better way of looking at the big picture is to think of car insurance in terms of the “consequence of loss” rather than strictly profit and loss.
That means that the risk of having your car destroyed (or your car destroying someone else’s property) would be too catastrophic to manage. You couldn’t recover from such a major disaster, and so you are willing to pay the premiums (seeing them as necessary expenses) so you can plan for the worst case scenario. In business, you should always have a backup plan for every foreseeable action, even negative actions; the same philosophy works in car insurance.
Suppose for a moment that your car was totaled in a freak car accident one night. Without insurance and without “fault” (another person that is found legally responsible for your loss) you have no rights to fall back on and receive no compensation. If you make a mistake and crash into someone else, but have no liability insurance, you can be sued for property damages. You can easily lose your assets if you are taken to court over the matter.
The Most Important Types of Auto Insurance
Nightmarish scenarios like this can be avoided with a good car insurance policy that takes your needs into account. Some car insurance policies are necessary for daily living. Liability insurance is the most important form of car insurance, and the only car policy that is required by the majority of U.S. states. Liability insurance covers almost any mistake you make on the road that results in damage to other vehicles, as well as damage caused to your vehicle that is not deemed a “fault” of another car.
While liability insurance doesn’t totally protect you from a lawsuit, usually, in cases where personal injury is absent, the totaled car can be paid for and the insured will receive a check for the insured amount, eliminating the need for a lawsuit. Since minimum liability insurance rates are based on the average cost of a car today, most cases never go to court. Problems can occur in cases where the minimum liability insurance rate falls short of the total cost of the vehicle. In cases like this, the victimized motorist may choose to go to court to seek additional damages for the lost property. This is the reason why many motorists choose to get liability coverage for a higher amount than the legal minimum.
Collision insurance is an insurance policy that protects your vehicle from all road-related damages. In some states, collision insurance and liability insurance are combined into one product and only a motorist’s own insurance company pays for the damages. These “no fault” states also require that motorists waive their right to a lawsuit in exchange for this provision.
Comprehensive insurance, which protects a driver against theft and other miscellaneous damages (like hail, vandalism and falling objects) is not legally required. However, drivers with luxury vehicles may prefer to have this policy added on to their account, especially if they don’t want to have to pay for repairs out of their own pocket. Motorists must decide whether they want to keep their premiums low by choosing a high deductible rate (meaning the motorist covers all damages up to the deductible price) or pay high premiums for greater coverage.
Tips on Buying Car Insurance Policies
There is also an insurance policy for bodily injury liability. This policy specifically covers the medical expenses of a person who gets injured in a crash when you, the driver, are found to be at fault. These policies have maximum dollar amounts that the insurance company is willing pay for one driver’s injuries, as well as total injures for multiple passengers. Liability insurance may combine bodily injury and property damage into one package.
Another policy to speak of is personal injury protection, which covers the medical expenses after an accident for you and other passengers inside your vehicle. Uninsured and underinsured motorist policies protect you against motorists that do not have the minimum amount of insurance required by law. None of these extra policies are necessary. However, living without this optional protection is a risk that not all drivers can afford to take. Bear in mind that some policies, such as personal injury protection, may actually be covered in basic policies like liability coverage or health insurance.
Car insurance agents and workers recommend to new policyholders that they increase the deductible so that they can lower the price of premiums while also preventing rates from increasing. The less damage you report to the insurance company, the less of a risk you become to the company, and thus your premiums will remain low. Besides, this is a more effective method of “consequence of loss” budgeting. This way, you are saving month-to-month on premiums and are not reporting unnecessary debits; at the same time, you are also buying peace of mind for the uncertain future.
Finding Car Insurance Quotes Online
In the end, you decide how much car insurance you need, by analyzing your own finances and determine what you can—and cannot—afford to lose. Find out what car policies you can find online and which ones are best suited for your demographic, your occupation and driving style. You can search with our free online comparison website right now and search for different auto insurance providers – enter your zip code above to start comparing car insurance now!
