The Truth About How Much Auto Insurance You Need
Very few people can say they have never been involved in an accident at some point in their lives, so chances are you will be utilizing your car insurance policy at some point in your driving career. The purpose of an automobile insurance policy is to protect you from being personally liable in the event you cause an accident. In most cases, it does the job and provides enough coverage for the loss. However, in some cases, depending on the coverage you chose at the time you purchased the policy, the coverage you have been paying for may not be enough. Here are some important things to consider when deciding how much coverage you need.
1. How much coverage do I need for my own vehicle?
In most states, if you own your vehicle outright, you can decide if you want to carry comprehensive and/or collision coverage to protect your vehicle if it is involved in a loss. You can also just choose to carry coverage for damages or injuries you cause to other vehicles or people (what is referred to as a liability only policy). The best rule of thumb: If your car was totaled and you could not afford to replace it, opt carry comprehensive and collision coverage on your vehicle, unless the cost outweighs the value of the vehicle.
2. How much property damage coverage do I need?
If you cause damage to someone else’s vehicle or property and do not have enough coverage to take care of all the damages, you can be held personally responsible for the difference. Some states, like New Jersey, only require $5,000 in property damage coverage. Keep in mind the average new vehicle costs about $25,000. If you total one vehicle, you could be in big trouble. More is better when it comes to property damage coverage. Aim for at least $50,000 in coverage to ensure you are adequately protected.
3. How much injury coverage should I carry?
There are two types of injury coverage in most states. There is bodily injury coverage, which will provide protection for pain and suffering claims, should you cause injury to another person as a result of an accident. There is also what’s called SUM (supplementary uninsured/underinsured) coverage. This is coverage for yourself or another insured person on your policy, should someone cause you injury and not have enough, or potentially any, coverage at all to allow for your pain and suffering claim. When choosing the amount of coverage you need, remember, the minimum is usually not enough. The most popular choice here for both bodily injury and SUM coverage is $100k/$300k.
Remember, it just takes one unfortunate turn of events to potentially cause financial devastation in your personal life. That is why it is so important that you get the facts about what each available coverage means up front before choosing your automobile policy. Although choosing the least expensive policy may seem like the most appealing option to you, it is important to keep in mind that this can cost you handsomely down the road.