What Auto Insurance Do I Need? A Comprehensive Guide

At a minimum, you must purchase your state's minimum car insurance requirements. But state minimums are woefully inadequate and won't provide any coverage for your own car repair bills. If you want better coverage, you'll need to buy more than the minimum requirements. Most states require certain types of auto insurance, such as liability, uninsured drivers, personal injury protection, or MedPay. In addition, if you have a loan or lease for your car, your lender may require you to have crash and comprehensive insurance.

Liability coverage is designed to ensure that drivers, passengers and pedestrians who suffer damage or injury due to another driver do not have to pay for repairs or medical care out of their own pocket. Nearly all states require drivers to purchase liability coverage, although some states allow drivers to waive insurance if they can show that they have the financial resources available to pay for damages in the event of an accident. Property damage liability insurance covers damage to property, usually to another vehicle, but also to any structure or personal property damaged in an accident. Bodily injury liability insurance, as you might expect, covers injuries to individuals, drivers, passengers, or pedestrians. Some States Require Coverage Beyond Basic Liability Coverage.

These types of coverage are optional in other states at an additional cost. Personal injury protection covers medical expenses and, depending on the policy, other costs, for the driver and covered passengers, regardless of who caused the accident. Several states have made PIP coverage mandatory to try to reduce the number of lawsuits after car accidents. While there is no universal definition, it generally refers to a policy that combines car liability insurance, collision insurance and comprehensive insurance. We collect data on dozens of auto insurance providers to rate companies based on a wide range of ranking factors. Most lenders require a homeowners insurance policy to apply for a mortgage, but even if they don't, it's a good idea to have a policy anyway.

If you have collision coverage, your insurance company will pay for damage to your vehicle in the event of a collision, regardless of fault. Newer cars may be more expensive to insure if they have a high value or are expensive to repair, so a lender may request higher coverage limits. Even if you're not required to have comprehensive collision insurance, they're usually a good investment, as they protect you from paying out-of-pocket for costly vehicle repairs.

Comprehensive car insurance

pays for the repair or replacement of your vehicle when it is damaged by something other than an accident, such as vandalism or a natural disaster. Remember, insurance only pays up to your coverage limits, so the recommended car insurance coverage depends on your net worth. Liability insurance covers costs such as medical or repair costs for other people if you cause an accident.

If you have coverage for uninsured drivers, your insurance company will cover damage or injury caused by another uninsured driver. A good rule of thumb is that if the cost of comprehensive insurance exceeds 10% of the value of your vehicle, you can consider abandoning it. Even if your state doesn't require one type of coverage, you may still be available to purchase from your insurer. With a basic understanding of the main types of car insurance, you can create a good policy that fits your specific insurance needs.

Blanche Kroner
Blanche Kroner

Friendly social media trailblazer. Typical music lover. Professional travel scholar. Hipster-friendly zombie practitioner. Evil travel fan.

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