A Guide to Automobile Insurance
What Kind of Coverage Do You Need?
Car insurance is just one more expense that eats into your income. But it provides critical financial protection if you’re involved in an accident.
All states require you to carry liability insurance against bodily injuries and property damage. This covers injuries to other people, their car, and property such as buildings, utility poles, or fences. Although every state requires a minimum amount of coverage, you should consider buying more. If you don’t have enough liability insurance, the other party might sue and you could lose assets such as your home or financial investments.
Insurers also offer other types of optional coverage, which you should carefully consider. You can save money on your policy by declining them, but it may put you at financial risk.
- Personal Injury Protection. If you’re injured or disabled in an accident, medical insurance might not pay all of your expenses. Personal Injury Protection provides additional money to help cover more of your healthcare and rehabilitation costs, as well as lost wages if you can’t work because of the accident.
- Collision. When you carry collision insurance, you’ll be reimbursed for damage to your vehicle if you have an accident that’s your fault. There is a deductible, which is what you’d have to pay yourself before collecting from your insurer. Before you buy collision coverage, find out the value of your car – if it’s worth less than 10 times the cost of the overage, you may want to pass on it.
- Comprehensive. This type of coverage reimburses you if your car is stolen or if it’s damaged by something other than an accident. You’ll also have to pay a deductible, so the value of your car will help you determine if the coverage is worth the cost.
- Uninsured and Underinsured Motorist Coverage. With this coverage, you’ll be covered if you or a family member has an accident with someone who doesn’t have insurance or with a hit-and-run driver. You’ll also be covered if the other driver is at fault and doesn’t have enough insurance to pay your total damages.
Availability of products and coverages varies by carrier and state. Some products and coverages may not be available in all states.