If one of your 2022 resolutions is to get your finances in order, you may want to look at what insurance you have, including car insurance. in fact, some of us may not have the right amount of auto insurance. too little, and an accident could cause significant financial damage; too much, and you may just be wasting money. Here’s a guide to help you determine exactly how much car insurance you personally need, and you can compare different car insurance rates here.
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do you have the minimum auto insurance required in your state and anything else?
Drivers need at least the minimum amount of auto insurance required by their state, and most need more than that, says les masterson, insurance analyst and managing editor of carinsurance.com. Most states generally require bodily injury and property damage liability coverage, about half require some form of uninsured or underinsured motorist coverage, and more than a dozen require personal injury protection, for example. “State requirements generally don’t offer the protection you need,” adds Masterson.
As a general rule of thumb, auto insurance experts recommend at least 100/300/100 liability coverage, i.e. $100,000 bodily injury liability insurance per person, $300,000 bodily injury liability per accident and $100,000 in property damage liability per person. accident. “That level of auto insurance is considered comprehensive coverage, and having that expanded liability protection can give you more protection in the event you have an accident,” says Masterson. And if you have significant assets, you may want more, says Janet Ruiz, director of strategic communications for the Insurance Information Institute. “Liability protection often goes up to $500,000 for auto insurance,” says Masterson. and you may also want other types of insurance, which we discuss in the next section.
Do you have the right types of insurance?
Understanding the specific types of coverage can also help you determine the policy that makes the most sense for you. In this section, we’ll break down the main types of insurance and give rough estimates of how much experts recommend of each. use a calculator like this one from insurance.com to figure out exactly how much you might personally need. With so many types of auto insurance available, it can be hard to figure out which plans make the most sense and how much you’ll need of each. . Among the most common are liability insurance, which pays for injuries to others or property damage when you cause a car accident, and uninsured motorist insurance, which pays your medical bills if someone without insurance or enough insurance crashes into you and you or your car is injured. for new or leased cars, comprehensive and collision insurance may be required, and they cover a variety of issues including theft, vandalism, and natural disasters.
Auto insurance companies also often offer optional coverage options, such as auto rental coverage, gap insurance, and roadside assistance. If your car breaks down or is in an accident and your car is in the shop, rental coverage will cover the cost of a rental car for days when your car cannot be driven. Generally, you will be eligible to rent a car up to a certain dollar amount and the cost of the car will be reimbursed by the insurance company. Gap insurance helps pay off your loan if your car is totaled or stolen and you owe more than the car’s written-down value, but this type of coverage is only available if you’re the original loaner or the leaser of a new vehicle. /p>
If this all sounds too expensive, remember this: Getting a higher deductible can lower your premium. “The deductible is what you have to pay when you file a claim and the insurance company takes care of the rest of the loss. If your car has $2,000 in damage and you have a $500 deductible, your insurance company will give you $1,500 for the damage,” Masterson says. But Masterson cautions, “Make sure you pick a deductible you can afford if you need to file a claim. it’s a good idea to set that money aside in case you need it for a future claim.” You can compare different car insurance rates here.
what kind of car do you have?
A new car will need different levels of insurance than the beat-up one your mom gave you. If you’ve got a shiny new whip, comprehensive coverage can help pay to repair or replace your car if it’s stolen or damaged by vandalism, natural disasters, or even fire and flood.
and with a new car, says janet ruiz, director of strategic communications for the insurance information institute, you may also want gap coverage “which will replace a vehicle that is 3 years old or newer with a new car if your car is destroyed.”
For older cars that aren’t worth a lot of money, it may be wise to waive comprehensive and collision coverage, since the policy may not pay more than the car is worth when there’s a loss or accident.
If you rent a car, you’ll likely need full coverage auto insurance, which includes comprehensive and liability coverage, as well as required liability.
Do you have many assets?
If you need even more coverage, blanket policies are available and under the blanket policy, you can get more than $1 million in coverage. If you cause an accident and reach your policy’s liability limits, an umbrella policy can help pay the remaining costs. it is more suitable for those who have large assets such as property or significant savings.