Understanding Coverage
When buying auto insurance, make sure that your entire family and all your assets are covered. Most states have minimum requirements for insurance coverage that is designed to cover the costs to the person in the other car if something goes wrong. The minimum coverage required by the states is not often adequate to do what is needed should a serious accident occur. The minimum requirements by the state only require $100,000 per person and a limit of $300,000 per accident in coverage per accident. These do not provide adequate coverage for the average motorist.
If you get into an accident with a hit-and-run driver or someone who is under-insured or completely uninsured you will find that your coverage against the motorist will be a life-saver. It will protect you from the expenses for things such as medical services, rehabilitation services, funeral expenses, and even pain and suffering. You will find that this coverage also has limits and you need to be aware of what they are. If you feel that the customary limits are not enough be sure to add additional coverage. You will want this coverage to be equal to the coverage you have on bodily injury.
You will also want to make sure you have personal injury protection, which is also known as ‘no fault' coverage. This covers medical, rehab, and funeral expenses for household members as well as some degree of lost wages and in home health care and services. Unless the minimum required amount is truly minimal you should buy the minimum required.
If there is room in your budget you should seriously consider the following options and add ons for your auto insurance.
• Collision insurance. This pays to either replace or repair your car if the need arises as the result of an accident. This coverage is required if you have a loan on your car.
• Comprehensive coverage . This will pay if your car or the things inside your car are stolen or if your car is damaged by fire, water, and other similar affects. Most lenders will also require this sort of coverage in order to protect their investment.
Both of these types of coverage will require a deductible, which is a certain amount of money that you must pay before they will pay. The higher your deductible, the lower your premium. It is recommended that you carry a minimum deductible of $500.
If your car is worth less than $5,000, you might find that comprehensive and collision coverage aren't really in your best interest. This is especially true if you consider the fact that the premiums you pay over time for this coverage is probably greater than the value of the coverage even if your car is totaled. You can also assume that if the other car is at fault, their insurance will cover the your car.
Most people feel that they can do without the following (but is entirely subjective):
1. Medical Payments. This coverage will pay the deductibles and co-pays that aren't covered by your health insurance or the insurance of your passengers. It will also cover the costs of funerals and rehabilitation services. This insurance is only useful if you have very high deductibles on your health insurance. If this coverage happens to be required by law in your state, buy the minimum.
2. Towing and Labor. This coverage only pays if your car cannot be driven away from the accident. If you are the member of an auto club you will not need this coverage at all.
3. Rental Insurance. While this only costs a few dollars each year and is definitely worthwhile if you rent cars often it is a wasted expense if you don't rent cars and can depend on another automobile for a while if necessary.
4. Glass Breakage Coverage. This coverage is an expensive luxury that can add as much as 20% to your premium. If it isn't built into your premium you would do well to avoid it all together.
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