That is a common question when someone begins to shop for insurance.
There are only a couple states that don't set minimum requirements for carrying Liability
Insurance on your car. The requirements are quite low so we would suggest not using them as a
guideline for what you should purchase. When you are looking to save money on car insurance, the liability portion
of your coverage is not the place to cut corners. If you’re found legally responsible for a greater amount than
your insurance covers, you have to pay the difference yourself. In other words, one bad accident can literally wipe
you out!
How Much Car Insurance Is Required by
State
The Insurance Information Institute (iii) recommends carrying at least a 100/300 car insurance
policy. This covers you for:
$100,000 of bodily injury protection per person
$300,000 of bodily injury protection per accident
Who Needs More Liability Coverage?
If you have more assets that you wish to protect from risk, you may want to talk to your insurance
agent about a liability umbrella
insurance. This type of policy is secondary insurance that pays once your primary coverage
has reached it's limits. These policies are typically inexpensive for the amount of coverage you receive,
most people can get $1 million worth of coverage for a couple hundred dollars per year. If you have your home
insurance and car insurance with the same company then adding an umbrella policy will be easiest, otherwise
it's probably best to go with whoever has your car insurance.
How Much Comprehensive Car Insurance Do You
Need?
This depends primarily upon the value of your car and whether or not you have a loan on your
car. States do not require comprehensive coverage but if you have a loan or lease outstanding on your car the
financial institution will require coverage.
Comprehensive Insurance is usually combined with collision and liability insurance to provide
"Full
Coverage Car Insurance". The comprehensive portion is primarily to cover your vehicle for losses
resulting from incidents other than collision. A rock damaging your windshield or hitting an animal on the
road are both covered under your comprehensive coverage. Damage that occurs as a result of fire, flood or someone
stealing or vandalizing your car is also covered under the comprehensive.
In order to keep your premiums low, choose an insurance deductible that is as high as you are comfortable with. The more you are willing
to pay as a result of an incident the cheaper your coverage will be. Companies may offer different deductibles for
glass and other damage, so you can have an overall $500 deductible but a $50 glass deductible.
In this case if you hit a deer and the total damage was $2000, you would pay $500 and the insurance
company would pay $1500. If you had a rock hit your windshield and crack it then you would only have to pay the
first $50. Some companies will completely waive the deductible if it can be repaired instead of being replaced.
How Much Collision Car
Insurance Do You Need?
The Collision coverage pays for damage to your car when your car hits another car, is hit by
another car or you hit a stationary object. Similar to comprehensive coverage the insurance company will
pay for the damages minus the deductible you chose. The cost of coverage will depend upon the value of the
car you drive and how expensive it is to repair. To keep your premiums as low as possible you should compare
different deductibles. Typical deductibles are $250, $500 & $1000.
Coverage is normally limited to the cash value of your car, so that's why most people
drop "Full
Coverage" insurance once the car is older. Once a car is old enough to be a classic or
antique it is normally insured under a "Stated Value" insurance policy where you pay based on the agreed upon
value of the vehicle. Since most collectible and classic cars are licensed as collector cars and driven
very few miles, coverage is quite reasonable.
Collision coverage is not required by a state, but if you have a loan or a lease then the
lien holder
will require it.
Car Insurance Summary
States set the minimum liability insurance
requirements you can have on your vehicle. How much liability car insurance you need can also depend upon
the level of assets you desire to protect. The more assets you have the more coverage you would want, such as
an umbrella policy.
Collision and Comprehensive coverage are required only if you have a loan or lease on your
car. It is not a state requirement, rather it's required by the lein holder. The most effective way to
lower this portion of your premium is to increase the deductible that you pay when damage occurs.
Consult a local insurace
professional for additional advise and coverage details specific to your state.
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