Choose the Best Coverage
How much coverage is required by my state?
Required coverage varies by state. Minimums for auto insurance often look like this: 25/50/25. What this means is that your insurance only covers up to $25,000 per person injured in an accident, a maximum of $50,000 for all people injured, and $25,000 worth of property damage.
How much coverage do I need?
The more coverage you have, the less you will have to pay out of pocket in the event of a costly accident. You must carry at least the minimum amount required by your state, but it is suggested that you carry more. State minimums have not kept up with the increasing cost of repairs and medical expenses. If you are in an accident that exceeds your minimum coverage, you will be left to pay for the expenses yourself.
The following factors affect how much insurance coverage you should get:
- Risk aversion : You must determine how averse you are to risks and insure yourself accordingly.
- Geographic Location: If you live in the city, chances are much higher that you will be a victim of vandalism, theft, or minor accidents.
- Type of car you drive: You might want to spend more on coverage if you have a newer, more expensive car.
- Amount of assets you own: If you have many assets, you will want to protect them with more coverage.
- Passengers: If you frequently have passengers in your car, you should make sure your insurance covers them in the event of an accident.
How can I select the deductible that is right for me?
The standard deductible amount is $500, although you can elect to make this higher or lower. The higher your deductible is, the lower your monthly premiums will be. While this might seem very appealing, it is important to remember that you are taking on more risk by having a higher deductible. However, if you are a safe driver and have sufficient funds to cover a higher deductible, then it might be advisable to increase it.
Should I select Comprehensive or Collision coverage?
Both Comprehensive and Collision coverage are advisable as covering the cost of your car can be extremely costly. The only time where it might make sense to forgo these types of coverage is when the cost of your car is lower than what it would cost to fix it.