Let’s face it, auto insurance is all about saving money. Having an adequate amount of insurance coverage will keep you from going in the red financially after a significant accident. People ultimately purchase auto insurance to save money in the long run.
How do drivers know how much insurance to purchase? Understandably, auto insurance is not a one-size-fits-all deal. Some people will benefit from a small amount of insurance coverage, which helps with cheap car insurance, while others feel safer with full coverage insurance, even if it involves spending more money.
States set their own minimum auto insurance requirements. From there, you can decide if you’d like to purchase more insurance coverage or if you feel comfortable settling for the mandatory requirements.
What are the minimum requirements for auto insurance?
Most states require auto insurance. Failure to meet your state minimum car insurance requirements may result in unwanted consequences. With today’s technology, it’s possible for the police to catch uninsured drivers before even pulling them over. Once an uninsured driver is pulled over, he or she faces repercussions, the severity of which depends on the driver’s state of residence. Driving without insurance can result in fines, license suspension, or even jail time. In other words, it’s worth investing in at least your state’s minimum policy.
What may be included in a required minimum policy?
Some states require higher minimum insurance coverages than others. Here are common types of car insurance:
Bodily Injury: If you are in an at-fault accident, this portion covers injuries inflicted upon other drivers and passengers involved in the crash.
Property Damage Liability: This liability covers the costs of damages on another vehicle in an at-fault accident.
Personal Injury Protection (PIP): PIP covers your own medical expenses if you experience injuries after an accident.
Uninsured/Underinsured Motorist Protection: If you get into an accident with an uninsured driver, he or she may not be able to afford to pay for your damages or medical expenses. This protects you in these cases, so you are not forced to pay out-of-pocket following an incident that was not your fault.
Why do people choose the minimum amount of coverage?
The major reason people choose to purchase the minimum amount of car insurance coverage is the cost. A bare-bones auto insurance policy is going to cost a lot less money than a policy with more coverage options. Full coverage insurance is expensive. If you cannot afford to purchase collision or comprehensive insurance, opting for the minimum coverage may be the smartest choice for you.
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If you own a vehicle that is not worth a lot of money, you may not benefit from collision or comprehensive insurance, as the costs of your deductible may exceed the costs of your vehicle. If your car is damaged enough, you may be better off purchasing a different car rather than paying hundreds of dollars on a deductible on a vehicle that has a limited amount of life in it.
What if you want more coverage than that?
Some individuals choose to purchase full coverage car insurance to make sure they receive protection on all fronts, from at-fault accidents to natural disasters. Even though more insurance coverage costs more money, the repair costs are exponentially lower if anything goes wrong. Having comprehensive and collision insurance is the best way to ensure you have adequate coverage.
Let’s use a scenario to put it into perspective. You’re driving down the highway at night when a deer darts into the road, striking your vehicle. You can make a comprehensive insurance claim for the damage. If you don’t have it, you’ll need to pay for your repairs out of pocket.
Or perhaps you’re backing out of a parking spot and forget to check your blind spot before swiping a vehicle. If you have collision insurance, it will pay for your own car repairs, while your liability insurance will cover the repairs the other vehicle. If you don’t have collision insurance, you’ll need to pay for your own repairs.
Comprehensive insurance particularly appeals to people living in areas in which natural disasters and car thefts are common. Residents of earthquake-prone California may want to purchase comprehensive insurance to make sure their vehicle is covered if an earthquake damages their car. In addition, people living in cities may want to purchase comprehensive insurance in case a theft or break-in occurs.
Whether you’re interested in a bare-bones insurance policy or want the safety net of a policy with more coverage, you’ll want to shop around for quotes for the best prices.