Car Insurance Coverage

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Susan Kelly

Dec 30, 2022

Finding the optimal level of auto insurance coverage may take time and effort. Even while your state most likely mandates that you have some level of coverage, you might find yourself questioning whether or not it is enough and debating whether or not you should get more insurance.

There is no simple or expedient solution to this problem. To legally operate a motor vehicle in your state, you are obliged to obtain at least the minimum automobile insurance specified by that state. Beyond that, the quantity of coverage you buy should be determined by your available money.

Sufficient Liability Coverage

If you are at fault in an accident, you won't be compensated by the primary component of auto insurance, known as liability coverage. Instead, it will compensate for any injuries, fatalities, or damage to property that you are responsible for, according to the limits of your policy. The liability limitations of an insurance policy are sometimes presented in a format such as "25/50/15." This indicates that your insurer will pay up to $15,000 for any property damage you are liable for and up to $25,000 for any injuries you are responsible for causing.

Even though it is required in certain jurisdictions, minimum bodily injury limits may be as little as $15,000. Yet, a serious accident can quickly result in medical expenditures that are far more than that amount. According to the National Safety Council, the average cost of an accident that resulted in injuries that did not render the victim disabled was more than $28,000 in 2019. You will have to pay the remaining costs out of pocket if you are sued, and your liability coverage is inadequate.

So how can you determine when you've had enough of something? When evaluating the liability limitations of your vehicle policy, TJ Roberts, the owner of a Farm Bureau insurance office in Mission, Kansas, suggests that you consider both your personal net worth and the amount you drive. Roberts emphasizes that having the appropriate coverage levels for your financial circumstances is the most crucial aspect of auto insurance, and he emphasizes this point often.

You may calculate your net worth by tallying up all of your assets, such as investment and retirement accounts, and then deducting the total amount you owe on any debts. Then check to see if you have sufficient bodily injury liability insurance to cover that sum.

You may get additional coverage with an umbrella insurance policy if the liability limitations on your other policies have been exhausted, but you still want extra protection. Typically sold in increments of one million dollars, these insurance extend your existing liability coverage for your car and house. If you do not have any assets to protect other than your car, getting the minimum liability coverage should not cause you any problems.

Choose the Highest Level of Coverage You Can Afford, Depending On the Deductible

When added to liability insurance, collision and comprehensive coverage pay for damage to your own car, regardless of who was at fault for the accident. This kind of coverage is often referred to as "full coverage." When your car is involved in a collision with another vehicle, your collision coverage will pay out. Your comprehensive coverage will pay for repairs to your car if an event beyond your control, such as vandalism, theft, or an accident with a deer, damages it.

Both are completely optional unless you want to lease or finance a car. If you drive an expensive car that would be difficult to replace, comprehensive coverage after an accident may offer you peace of mind. If your car has a low monetary worth or is ready to pay for a replacement, you should avoid comprehensive and collision insurance. It will likely save you money.

If you decide to get collision and comprehensive coverage, you should pay close attention to the deductible. The deductible is the amount of money you are responsible for paying out of pocket before your insurance company begins to pay for a claim. Choose a deductible amount that you could pay in the event of an accident from $250 to $1,000, which is typical for collision and comprehensive coverage.

Uninsured Motorist Coverage

According to data compiled by the Insurance Research Council, nearly one in eight licensed drivers in the United States in 2019 did not have auto insurance. If you are hit by one of these drivers, and they do not have enough liability insurance, you may be out of luck unless you have uninsured motorist coverage or underinsured motorist coverage. They are similar to liability insurance in that they are often sold in limited amounts all at once.


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