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What Car Insurance Do I Need?

If you have a car and you are the owner, chances are you need car insurance. If you have a car and you are not the owner, chances are you need car insurance too. It all depends which state you are living in, but most of them have mandatory minimum car insurance coverage for drivers.

Purchasing car insurance coverage is as easy as checking what is the minimum coverage required by law and get it. But, should you only get the minimum coverage required?

There are several things to consider when deciding what coverage to get on your car´s insurance policy:

  • What you can afford
  • What you stand to lose if you are not properly covered

If you can´t afford anything higher than the minimum required by law or if you have no assets or savings, then it may be enough for you. Why is that? Because if you are taken to court after an accident, even if you lose the case, you have nothing to lose, as in no properties and no savings that might uses to pay the damage to a third party. Bear in mind that minimum liability insurance is often not sufficient to cover severe injuries or to replace a new car.

If, however, you have a decent amount of savings and/or valuable property, or a valuable car, then you should look for higher coverage.

What does liability insurance protect me from? If you are responsible for causing an accident, liability insurance covers bodily injury and property damage liability for third parties. This means it will cover the other party medical expenses and car repairs. If you didn´t get liability insurance, you would have to pay these expenses out of your own pocket; this could compromise not only your current assets, but your future wages as well until the damages are paid in full.

What does it not cover? If you were not alone in the car at the time of the accident, and you or your passengers suffered injuries, this is not covered by liability insurance.

So beyond the minimum liability coverage required by law, what other types of liability insurance coverage is there?

Car insurance quotes coverage is typically expressed in a three-numbers sequence. For example, 250/500/250. This means that the coverage is $250,000 for bodily injury per person, $500,000 for bodily injury per accident, and $250,000 for property damage per accident.

Depending on what you own –your savings, your properties, the cost of your car- you might not need as much coverage, or you might need a lot more.

Additionally, there are other types of coverage that, combined with liability insurance, will let you sleep a lot better at night.

Collision insurance: this type of coverage protects your car against financial loss due to physical damage when you are involved in a crash. This type of insurance covers damage from a crash with another vehicle, a tree, a house, a pole, and more. It also covers you from an accidents where no other object was involved, for example, if your car flips. Collision coverage can only be purchased with a liability policy.

Comprehensive insurance: this type of policy covers your car against damage not cause by an accident. Some of these include auto theft, vandalism, and natural disasters. This policy will pay to repair or replace your vehicle when the damage is cause by anything but a collision.

There are other types of car insurance that are less commonly purchased but can be an inexpensive complement to your basic policy. Some of these policies include:

  • emergency roadside assistance
  • guaranteed auto protection (gap)
  • rental reimbursement
  • mechanical breakdown insurance
  • personal injury protection

When deciding which coverage is best for you, weigh in what you cannot afford to lose. If you use your car a lot, and have enough valuables that you could potentially lose if you´re not covered by your policy, then it is important that you are fully protected and should consider taking a combination of policies that will cover all the bases. If you don´t drive a lot, have a beaten old car, and don’t have any valuable assets or savings, then the basic coverage might work for you. In the latter case, you should take into consideration your state´s regulations in regards to car insurance.