We all know that having car insurance is, at the very least, a good idea. In some states, it’s even required before you can have your car on the road. But what types of coverage are available to drivers? And which ones are best for you?
The most basic type of car insurance is liability insurance. In states that require you to carry some sort of insurance, this is what you’re required to get. Should you wind up in a car accident and you’re found at fault, liability insurance will cover the cost of repairing all property damaged in the crash, such as cars or even buildings, as well as any medical bills from injuries caused in the crash. Most states have a minimum requirement for liability insurance coverage; however, it’s usually a good idea to go beyond that if you can afford it because you are personally responsible for any claims that exceed your coverage’s limit. How much liability insurance you need depends: the more assets you have to protect, the higher level of coverage you should have.
The next type that many people find useful is collision insurance. With this policy, your insurance company will pay for any repairs to your car in case of an accident. If your car is totaled in an accident, the company will pay you the full value of your car before the accident. Collision insurance isn’t a must-have, and if your car is older, it may not be worth paying for it. If you have a good-sized emergency fund, you may be safe without collision insurance, but if you’ve chosen a more expensive car or your car is relatively new, then it can help you sleep better at night.
Another type of insurance, comprehensive insurance, will cover anything else that happens to your car. Weather damage, theft, or an animal collision; with this insurance policy, all of that will be covered. A comprehensive insurance policy is nice to have, but it can be pricey and may not be worth it to you if your car would be easily replaced. You can easily bring down the price of a policy should your vehicle have anti-theft and tracking devices installed.
Uninsured motorist protection is also good to have, as even drivers with liability insurance might have a relatively low minimum that may not cover all of the expenses that go along with an accident. You definitely don’t want get stuck with the bills in an accident that wasn’t even your fault! This type of insurance isn’t as clear-cut as other policies. Even if a driver doesn’t have enough insurance to cover damages during an accident, he should still have an obligation to cover the costs out of pocket, but when the person at fault doesn’t have any money, there can be problems. (more…)