Auto Insurance: How much coverage do you need? Author:    Posted under: Auto InsuranceAuto Insurance questions answeredAuto Insurance TypesBlogs


Some people give no thought when purchasing car insurance and put all the weight of their decisions on the lowest quote they can get. Some think that meeting the minimum required by law in their state is enough. But just how much coverage do they get that way?  In the unfortunate event of an accident, they find out that the few dollars they saved on their car insurance premium is about to cost them greatly. Going through the different types of coverage here, you will hopefully get a clearer picture of what your auto insurance coverage can do to help you when you need it.

Starting with the basics, (Bodily Injury or Property Damage) Liability Coverage is a state requirement for all motorists in the US.  The minimums differ from state to state and it provides coverage to other people you may have injured or property you may have damaged in an accident. Claims for this type of coverage can mean anywhere from medical bills, loss of income or pain and suffering.  In serious cases that result in a lawsuit, you will need enough insurance to cover a ruling against you without having an adverse effect on your personal assets. Keep in mind that this type of coverage only applies to the people or property you have hurt or damaged, not you or your passengers or the person you have authorized to drive your vehicle.

You may also wish to purchase Comprehensive Coverage and Collision Coverage. Comprehensive covers your vehicle (this is limited in scenarios where you are driving another vehicle other than yours) for losses sustained from an accident other than a collision (for example in the case of theft, or damage caused by an animal or natural calamities like fire and flood). Collision covers the damages to your car, whether you hit another car, or another car hits you. To keep your premiums low, you have the choice to select an amount of deductable that you feel comfortable paying out of your own pocket when an accident forces you to get your car repaired. But zero deductibles fully protect you. Although you will pay slightly higher for your premiums, you will not have to worry about paying any amount out of your own pocket in an accident. If you are financing your car, the bank will require that you get these types of coverage. On the other hand, it is important to note that if you have an old car or a car that is in poor condition, this type of coverage is normally limited to the cash value of your vehicle. It might be wise to just drop this coverage altogether because it will only prove to be more expensive than it is worth.

Another type of coverage is Personal Injury Protection. Within limits specified in the policy, this covers the medical, hospital and funeral expenses for the insured, passengers in his vehicle and/or pedestrians struck by the insured. The parties covered and amount of protection may vary depending on the state. If you have health insurance or disability insurance, you probably won’t need to spend much on Personal Injury Protection.

Two more important types of coverage that a motorist should get are the Uninsured Motorist and Underinsured Motorist. We can never be too sure that the motorists meet on the road every day are adequately insured, if at all. If you get into an accident with someone who is either uninsured or underinsured, this coverage will step into his shoes and fill the inadequacy or lack of insurance on the other person’s part as long you are not the one at-fault.

Keep in mind how expensive hospital stays can be, sometimes your coverage isn’t nearly enough to pay for all the expenditures you will be faced in the event of an accident. The bottom line is, you should carry as much insurance as you can afford. If you can, increase your limits for Personal Injury and Property Damage Protection. You will find that the increase in your premium is a relatively small amount compared to what you will have to worry about later on, if and when catastrophe hits.

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