As a driver on the road, you have many responsibilities. In addition to following traffic laws and operating your vehicle safely, you also need to ensure you can pay for any damage you may cause. Car insurance does this by preventing drivers from being saddled with expensive repair bills or medical costs.
With the many options and add-ons available, it can be difficult to determine how much car insurance you need. The right plan for you can depend on a number of factors, including how much you drive, where you drive, the value of your car, and local legal requirements. Here is what you need to know about car insurance to help you determine the right amount of coverage for your lifestyle.
Most states have minimum coverage requirements for all drivers. Typically, this will include at least liability coverage up to a certain dollar value. The penalties for not having insurance will vary between states but often include fines, license suspension, and even arrest in some places.
If you are financing your vehicle, your lender will also have specifications for the amount of insurance you must carry, which is usually much higher than the state minimums. Failing to maintain the required coverage can violate the terms of your loan agreement.
If you are at fault in a car collision, liability insurance will compensate the other parties for property damage and physical injuries up to a limit. For example, a 50/100/20 policy will cover up to $50,000 in bodily injury for one person, up to $100,000 in bodily injury for multiple people, and up to $20,000 in property damage.
Though most states require liability coverage, the limits are often low and may not provide adequate financial protection for costly accidents. Additionally, this coverage does not cover you or your passengers.
Collision and Comprehensive Insurance
Collision coverage will pay for the costs to fix your vehicle after a car accident, while comprehensive covers other types of damage, such as vandalism and weather-related issues. Lenders will often require that your carry both of these types of insurance.
With both collision and comprehensive, you will usually pay a deductible. A deductible is how much you must pay for repairs before your insurer begins to cover the costs. Typical amounts include $250, $500, or $1000. A lower deductible results in higher monthly premiums.
Personal Injury Protection and MedPay
Personal injury protection covers a percentage of medical expenses and the associated lost wages for you and your passengers regardless of who is at fault in an accident.
Medical payment, or MedPay, coverage will also cover medical costs for you and your passengers. However, it does not cover the lost income from the accident. Many people with medical insurance do not find it necessary to carry MedPay.
Though optional in most places, some states will require one of these add-ons.
Uninsured Motorist Coverage
Uninsured or underinsured motorist insurance will cover medical expenses and damages that exceed the at-fault party’s coverage limits. For example, if the other party’s bodily injury limit is $50,000 but your medical bills are $55,000, your insurer will take care of the difference. Some states require drivers to purchase uninsured motorist coverage.
Insurance companies may have other offerings to add to your plan, including roadside assistance, rental reimbursement, aftermarket parts coverage, and glass replacement.
To determine the ideal insurance coverage for your vehicle, you should carefully assess your unique needs. You will want to evaluate your lifestyle, driving habits, economic circumstances, and legal requirements. The right insurance plan will protect you from costly repair bills and medical expenses.