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. The medical bills and property damage may be covered, depending on your auto insurance policy. 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 results in lower premiums, while others feel safer with full coverage insurance, even if it involves spending more money.
You can determine the minimum amount of auto insurance you need based on your state’s minimum 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?
Every state has a required minimum amount of auto insurance. The only states in which drivers do not need to purchase auto insurance are New Hampshire and Virginia, though many drivers in these states are insured anyway. It’s your responsibility to work with insurance companies to determine the minimum amount of insurance coverage you’ll need in your state of residence.
Failure to meet your state’s minimum 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 your state’s minimum policy.
What may be included in a required minimum policy?
Every state deals with auto insurance differently. Some require higher minimum insurance coverages than others. The following components may make up your minimum car insurance limits:
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.
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 insurance as well as 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. If you have comprehensive insurance, which covers many incidents that are out of a driver’s control, you’ll have to pay the cost of your deductible and your insurance company will take care of the rest. If you don’t have it, you’ll need to pay for a majority of the 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, you’ll need to pay the cost of your deductible, while your insurance company will cover the repairs on your car and the other vehicle. If you don’t have collision insurance, however, you’ll need to pay for some of these costs on your own. While some states’ minimum requirements include policies that cover the other driver’s injuries and property damage, others do not. This means you may be responsible for paying for your vehicle’s damage, the other driver’s vehicle, and injuries that occur as a result of the accident. These costs can be astronomical.
Comprehensive insurance particularly appeals to people living in areas in which natural disasters and crimes 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, either directly or if a resulting falling object causes harm to the vehicle. In addition, people living in cities may want to purchase comprehensive insurance in case a theft or break-in occurs; this is even more prevalent in individuals who have street parking in the city, as cars parked in garages are generally safer.
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. Not only will you save time and money, you’ll be able to select an insurance company and coverage option that suits your lifestyle and needs. If you’re purchasing auto insurance, which you certainly should, whether your state requires it or not, this time- and money-saving trick may be a lifesaver.