Which Type of Auto Insurance Is Right for Me?

Choosing the right auto insurance is always a bit of a challenge. There are so many variables involved and there may be extenuating factors to consider, such as if you have a vehicle loan and the lender has specific insurance requirements. In any case, you want to protect yourself and your vehicle with the right insurance. Here’s how to figure out what that means to you.

How Much Insurance Do I Need?

There is no simple answer to this question. Everyone will have different needs based on where they live, whether they own or finance their vehicle, what they prefer, and so forth. Two common terms used here are state minimum and full coverage. Between those, there runs a gamut of other options.

·  State Minimum: This is the minimum amount of coverage required by your state. If you own your vehicle outright, you can typically get by with this limited coverage, but it’s not recommended because it usually costs more in the long run when you’re paying a lot of accident-related costs out of your pocket.

·  Full Coverage: Depending on the insurer or lender, full coverage insurance usually refers to a policy that includes liability coverage along with physical damage coverage, such as comprehensive and collision insurance. You may also have to purchase uninsured or underinsured motorist coverage, in some cases.

What do you feel comfortable with? All requirements aside, this is about protecting you and your vehicle. It’s about giving you the peace of mind that you’re protected on the road, no matter what—can you put a price on that? And when you can typically get a lot more coverage for only a little more money, it’s always better to go higher when you can.

What Types of Coverage Should I Buy?

Again, this depends on your needs, as well as what is required of you by state law and/or your lender if you have a loan or lease. As a rule of thumb, it is better to err on the side of caution and get at least the following types of coverage.

Liability

This is the basic element of a car insurance policy. It covers injuries and property damage for accidents up to a certain amount. This coverage is divided into three areas:

1. Coverage limit per person

2. Coverage limit per accident

3. Property damage coverage (per accident)

So, if you have $25,000 in coverage per person, $50,000 per accident, and $10,000 in property damage, it may show up on your policy documents like this:

25/50/10

or

$25,000/$50,000/$10,000

Comprehensive and Collision

This coverage is designed to provide two-fold protection. You can buy comprehensive coverage without collision, but not the other way around. Typically, people choose both. Comprehensive coverage protects you against things like storm damage, theft, vehicle fires, etc. Collision coverage is for damage related to accidents where you were at fault. This additional financial protection doesn’t cost a lot and can provide much more peace of mind.

Medical Payments/PIP

Personal injury protection, or medical payments coverage, will provide additional coverage for medical expenses and related costs due to injuries from an accident regardless of who was at fault. It can even cover lost wages, deductibles, and more.

Uninsured/Underinsured Motorist Coverage

As many as 15% of all drivers in the United States are driving without insurance. If you’re hit by one of them, the costs could be astronomical and they won’t be able to pay. This coverage makes sure that you’re protected, no matter what insurance the at-fault party has.

How to Choose

The best way to narrow down your options and get the right insurance is to work with a reputable insurance agent who can help you choose the right policy and coverage limits.