FAQ

What kind of car insurance coverage should i get

If you own a car, you’ll need to show “financial responsibility,” which means you can pay if you or someone else driving your car causes an accident.

All states have some form of financial responsibility law, and most drivers satisfy this requirement by purchasing auto insurance. This is usually the easiest and cheapest way. If you don’t want car insurance, your state may require you to post a bond that can be upwards of $50,000 to prove financial responsibility.

Once you’ve ruled out the idea of ​​shelling out tens of thousands of dollars to your state, the next logical question is: how much auto insurance do I need?

key points

  • Most states require drivers to carry auto liability insurance, but coverage requirements vary by state.
  • Depending on where you live, you may be required to have other types of coverage, such as uninsured motorist coverage, personal injury protection, or medical payments coverage.
  • drivers who lease or finance their vehicles are often required to carry comprehensive auto and collision insurance.
  • Compare auto insurance quotes to find the best coverage at the most affordable price.
  • How much car insurance do you really need?

    At a minimum, you should purchase your state’s minimum auto insurance requirements. but the state minimums are woefully inadequate and will not provide any coverage for your own car repair bills. if you want better coverage, you’ll need to purchase more than the minimum requirements.

    There are several types of coverage to choose from. With a basic understanding of the main types of auto insurance, you can put together a good policy that fits your specific insurance needs.

    civil liability insurance

    Liability insurance covers injuries and property damage suffered by others if you are at fault in an accident. It also covers your legal defense and any settlement or lawsuit if you are sued for an accident.

    Liability auto insurance includes two different types of coverage in one package:

    • bodily injury liability pays for injuries to other drivers, their passengers, and any pedestrians injured when you are at fault in an accident.
    • property damage liability pays for damage to someone else’s property, including your car, when you cause an accident.
    • Here are some examples of what liability insurance covers:

      • hit another car from behind at a traffic light and cause damage
      • bump into a neighbor’s fence
      • you are responsible for a car accident and the other driver is injured
      • Almost every state has a minimum liability insurance requirement, with the exceptions of New Hampshire and Virginia (although both states have some liability requirements under certain conditions).

        For example, in California, you must have liability insurance with at least $15,000 for bodily injury to one person, $30,000 for bodily injury to multiple people in a single car accident, and $5,000 for property damage (written as 15 /30 /5).

        But here’s the rub: These amounts are insufficient if you cause a serious car accident. If you destroy someone else’s car, $5,000 of property damage won’t get you very far. And if you are at fault in a multi-injury car accident, medical expenses can quickly exceed $30,000. you will be aware of any amount that exceeds the limits of your coverage.

        How much liability insurance should I buy? A good rule of thumb is to buy enough liability insurance to cover what you stand to lose in a lawsuit against you if you cause a car accident. In California, a policy with 250/500/100 would be a much better option than the state minimum.

        For additional liability insurance on top of your basic auto and home insurance policies, consider getting an umbrella policy. You can buy an additional $1 million (or more) in liability coverage through an umbrella policy for a relatively inexpensive amount.

        uninsured motorist insurance

        uninsured motorist (um) and underinsured motorist (uim) insurance pays your medical bills if someone crashes into you and you don’t have or not enough liability insurance. Uninsured motorist coverage is required in some states and optional in others. In states where um is optional, you can usually decline coverage in writing.

        if um is available in your state, this is a good coverage to have. um coverage pays for:

        • medical expenses for you and your passengers
        • lost wages if you are unable to work due to injuries sustained in a car accident
        • funeral expenses
        • pain and suffering
        • car damage (depending on its condition)
        • How much uninsured motorist coverage should I buy? You’ll typically need to buy um in amounts that match your liability insurance. for example, if you have 250/500/100, you will need to purchase the same amount of coverage um.

          collision and comprehensive insurance

          If you want coverage for car repair bills, you need comprehensive and collision insurance. Often sold together, they cover a variety of issues including auto accidents, auto theft, vandalism, animal collisions, falling objects, fire, flood, and hail damage.

          If you have a car loan or lease, chances are your lender or leasing company will require you to have both.

          How much collision and comprehensive insurance should I buy? Both types of coverage will cover the cost of repairing or replacing your car if it is damaged due to a problem covered by the policy. If you want to cut costs, select a higher deductible amount, which is the amount you’ll pay out of pocket if you file an insurance claim. For example, a $1,000 deductible will result in slightly lower premiums compared to a $500 deductible.

          personal injury protection

          Personal Injury Protection (PIP) covers medical bills for you and your passengers, no matter who caused the car accident. It also pays for other expenses like lost wages, funeral expenses, and replacement services you can’t do because of injuries, like cleaning or babysitting services.

          some states require pip as part of their “no-fault car insurance” laws, while in other states you can purchase pip as an optional type of coverage.

          How much PIP insurance should I buy? PIP rules vary by state where it is offered. For example, for Florida car insurance, pip options range from basic to extended:

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