Motorists try to pass the risks associated with driving a vehicle to insurers with a policy contract. It would be sensible to insure large part of insurable financial losses auto owners may face, providing premiums are affordable. That is why it is important to know how to choose auto insurance coverage and one way of determining it is to reverse engineer by looking at what type of a policy cover you need.
Once the level of coverage is decided drivers will need to get multiple auto insurance quotes to see how much premium they are expected to pay. Then they can play around a bit to find the ideal coverage and agreeable price.
A policy has two sides to it; the policyholders and insurers. It may appear that only auto insurers are concerned with how much they need to pay in case of claims. However, it is equally important for vehicle owners to think what would happen in case of accidents and damages to their vehicles due to other causes like storms, floods or auto theft. So, you should ask yourself how much car insurance do I need to buy to pay for possible future losses.
Potential costs of insured losses play heavily in the decision making process for both parties. It can be easier to determine the type of a policy required by looking at possible damages a motorist may suffer or cause others to suffer.
Essentially a policyholder should expect to suffer at least three types of losses. It would not be hard to find an auto insurance policy to cover such losses. In fact, most companies will offer them as package policies to make them more affordable and attractive to applicants.
Let’s learn how to choose auto insurance coverage by looking at expected and insurable vehicular losses.
Bodily Injury and Property Damage Liabilities
First of all, it is a legal requirement to buy liabilities cover for injuries and damages a driver can cause to third parties. There is no question or argument about this part of a typical coverage. Drivers are advised and free to go well above the state minimum car insurance requirements but never below state set basic liabilities cover. Recommended auto insurance coverage limits for liability is over $100,000 for a single injury or damage claim and $300,000 for total injury claims. A liability car insurance policy will pay for the injuries and financial loss claims made against to policyholders.
It will not pay for losses suffered by policyholders or family members. If the insured or his passengers are unfortunate enough to be injured in a car accident, then they may have costs in the form of medical bills or time lost off work. Generally two kinds of coverage is sold to pay for injuries suffered by drivers and their family. They are Medpay and Personal Injury Protection (PIP), which pays for medical bills and/or time lost off work due to injuries sustained as the result of a car accident.
Motorists should check if their health insurance would pay for traffic related injuries to avoid buying duplicate protection. It is unlikely that a usual health insurance would pay for time off work or other consequential losses due to traffic accidents.
Damages to Insured Vehicles
The next step is to look at possible damages your car may suffer when you are looking into how to determine car insurance coverage. Vehicle owners can suffer physical damages due to a collision, theft, vandalism, fire or for many other insurable perils. A policyholder who wishes to be protected against damages to his/her automobile should include both Collision and Comprehensive Coverage to policies.
This will ensure that they have a financial protection against physical damage (except policy exclusions), and that the only out of pocket cost to insured will be the deductible. Otherwise drivers will have to come up with money to pay for repairs or finance vehicle replacement if it is totaled.
Damages Caused by Uninsured Drivers
Usually, a third party who caused damages to your automobile will have to pay for it. If they are insured their providers will have to pay for the damages and injuries they caused. If not, they will have to pay out of their own pocket. But, it is not easy to get money out of someone who hasn’t had the money to pay for insurance in the first place. So, how to determine auto insurance coverage for uninsured motorists?
Some states require Uninsured Motorist Coverage to be included in the policies sold automatically. And quite a few package policies come with this protection. Vehicle owners should check the availability of such cover and add it if it is not there already.
Car Rental Expenses
Another potential cost of an accident is the rental expense incurred while the insured vehicle is being repaired. If the policyholder has purchased rental reimbursement cover, then the insurer would pay for the insured’s rental vehicle while his/her own one is being repaired up to the limits set in the policy.
However, if the insured has experienced a car accident which left his vehicle unsafe to drive, and had not paid the premiums for rental insurance, then a rental vehicle would be the customer’s financial responsibility. Renting a car while repairs are carried out would become another cost of the accident.
It is possible that a third party may have caused the accident and would be liable for all of the losses. However, it would still be necessary to get the other insurance carrier to pay for the insured damages.
You should never count on third parties. You should think that you may be that third party who is liable. When you are purchasing a policy you should look at possible scenarios and buy sufficient car insurance coverage to pay for all of your losses or claims against you.
Points to Consider When Buying Car Insurance Policies
These are commonly required protections by most motorists. However, there is no limit to how much insurance coverage you can buy. How to choose car insurance coverage limits is up to you and you can use above guidelines. There are many policies in the market with highly comprehensive cover provisions.
You need to consider a few points before making a purchase. First of all, you should check if you have another policy that provides the required protection. Secondly, it is no doubt price is important and premiums should be within your budget. So, you should try to get cheap auto insurance quotes. Thirdly, consider the possible losses you may suffer as we discussed above.
And make a choice between passing the risk to an insurer or accept it on your own. If you can pay the losses out of own pocket you may leave it out depending on how confident you are about your driving and other factors. For example, you may decide that you don’t want to pay for rental reimbursements for several reasons. You may have sufficient funds to cover the rental, have another car you can use or public transport is reliable enough alternative solution.