How to Determine the Right Amount of Car Insurance Coverage

Car insurance is not a one size fits all service. Trying to figure out how much auto insurance you really need can be confusing unless you’ve got an idea what to base that critical decision on. Why is it so critical? Although most of us don’t think about our auto insurance on a daily basis, when you find your self in need of coverage due to an accident or other unexpected event, too little coverage can be costly, stressful, and devastating.

On the other hand, paying too much every month only serves to waste valuable money that your family could use in other ways. Knowing how to make that determination can help but your mind at ease now, and in the event of unexpected occurrences.

Factors That Impact Rates And Coverage

Many different factors determine each individual’s rate depending on your category based on things like age, gender and credit rating. Where you live can make a big difference as well. Your state can have a big impact on your insurance rate. While you probably won’t choose to move just because of a high auto insurance rate, it’s good information to have before deciding to make a move.

Purchasing an insurance policy can be very confusing. How do you know how much coverage you should buy? If you ask an auto insurance agent how much to buy, he may tell you to get as much coverage as you can afford. But auto insurance is not that simple. One of the first things to find out is the minimum amount of coverage that your state requires. You will then need to find out what protection that minimum auto insurance provides. What additional coverage is available, and what does it costs? What protection does it offer? These coverage definitions can help explain:

Comprehensive Coverage

Comprehensive physical damage coverage covers your vehicle and should also cover any other vehicles you drive. Comprehensive physical damage coverage covers other vehicles that you drive for losses that happen for reasons other than a collision. Comprehensive insurance covers your car if it gets stolen or damaged.

Collision Coverage

Collision coverage covers damage to your car when you are involved in an accident, whether you hit or are hit by another car or object. This kind of coverage will pay to repair your car minus the deductible. You can consider dropping this coverage if you have an older car since coverage is limited to the cash value of you car.

Medical Coverage

Medical Payments covers the medical expenses for you and your passengers if you are hurt in an accident. You may also have coverage protection as a pedestrian if a vehicle hits you. This coverage applies regardless of who is at fault.

Uninsured Motorist Coverage

Uninsured motorist coverage covers bodily injuries to you and your passengers when the other motorist either has no insurance coverage or is under insured. This coverage kicks in for accidents that are not your fault. In some states uninsured motorist coverage is available to cover any damage done to your car. This is important coverage to consider in case you are ever involved in an accident with an uninsured driver.

Personal Injury Coverage

Personal Injury Protection covers medical, hospital and funeral expenses of an insured driver, others riding in the car with the driver and any pedestrians hit by him or her.

Property Damage Liability

Property Damage Liability covers you if your car causes damage to another person’s property. This coverage provides legal defense if someone else someone decides to file a lawsuit against you. It is wise to buy enough of this coverage to take care of any damage your car could do to another car or object.

Rental Car Reimbursement

Rental Car Reimbursement covers the cost of renting a car if your car isn’t drivable, or while your car is being repaired due to a covered accident.

When you are deciding what type of coverage you need, consider your assets. What do you need to protect from being taken away if you cause an injury or damage with your car?