What does it mean to have a proper car insurance coverage?
By law we have to have auto insurance. Unfortunately, the “law” does not mention anything about proper insurance, so a lot of us are getting “just whatever, so I can drive my car”, without thinking about the consequences. I hope you understand that, in spite of being expensive sometimes, insurance can save you thousands, even hundreds of thousands dollars, which means you won’t loose your house, half of the paycheck or your sleep for medical bills, lost wages, property damage and so on.
It does not matter if you are shopping for new car insurance or trying to keep yours up to date, you need to have the right coverage. There are some essential types of coverage. There are some you may actually live without. So, let’s have a closer look at them:
bodily injury liability - your financial obligation to another person for injuries you cause. Insurance company will defend you in court and pay for medical expenses, lost wages, funeral costs suffered by the injured party. It also covers “pain and suffering”;
property damage liability - similar to bodily injury liability, but covers property damage (like replacing or repairing another person’s vehicle). In both cases you need a good coverage (not the usual $100,000 - it is very low). One way to explain why you’d need a higher coverage is to look at your current income (is it pretty high?), or if you are a medical intern and expect great future income, or maybe you are a successful retiree - all means, that injured party can sue you for more money than you think. Another way to look at it - it will save you a lot of headache and money at the end;
personal injury protection and medical payments - both pay your medical bills suffered in a car accident up to the limit you’ve purchased (no matter who’s fault that was). Personal injury protection reimburses you for some of your lost wages or replacement services. Get only as much coverage as the law requires. Or (if the law permits) go without it in case your medical and disability costs are covered by your health insurance and long term disability insurance;
uninsured and underinsured motorist coverage - gets you covered in case of hit and run, or if another driver does not have any or enough of liability. It is only fair to have as much protection for your own injuries as you buy to cover the injuries you cause to others;
collision coverage - pays to fully repair your car or replace it (if it’s totaled) regardless of fault. To drop this type of coverage is o.k., when you own a car worth about $1,000; or you just had a DUI, so your premiums will be two or three times higher for the next five years;
comprehensive coverage - covers such damages to the vehicle as fire, wind, vandalism, theft, glass breakage or hitting a deer. Just as with collision coverage, it is smart to get comprehensive or not, depending on a car value. In case of financing your car, you might be required to have both comprehensive and collision coverage;
towing/road service coverage - probably better to go with automobile clubs , like AAA and others. Because the coverage has its disadvantages, for example, some insurance companies make you pay the claim, then file a claim report and then you wait for a few weeks for reimbursement. Coverage may be limited to some amounts, like $25, $50, $75 and so on;
loss of use/car rental coverage - covers the daily cost to rent a vehicle, while yours is badly damaged and being repaired. It’s good to have at least $30 per day benefit.
Now that you have an idea of what is absolutely necessary and what’s kind of secondary, you can go ahead and buy auto insurance yourself or get an insurance agent to help you build your perfect policy for the best protection and an excellent price as well.
