People buy car insurance to protect themselves against the costs of accidents, unexpected losses and financial distress caused by them. Without coverage, even a moderate crash could force you to pay thousands of dollars out of pocket. Nonetheless, if you keep adding every coverage available, you run the risk of costs outweighing benefits at the end.
It is best to know what automobile insurance coverage you need and shop around to get it at an affordable premium. Everyone has their own risk tolerance, financial position and assets to protect but there are several coverages recommended for most people and some of them you may have to buy legally, contractually and make sense financially. Here are most commonly considered coverages;
- Increase Liability Limits
Every state has minimum coverage requirements and liability is always included but minimums are often too low. If you only buy the basic required, you may have to pay out of pocket in case of moderate to severe accidents you cause. For Liabilities, recommended limits are at least 100/300/100. This is a maximum $100,000 if you injure one person, $300,000 for multiple persons and $100,000 for other people’s property damages.
- Comprehensive and Collision
Liability coverage only pays for other people’s property damages and not your own. Comprehensive Coverage protects your car against fire, theft, vandalism and acts of nature. Collision Coverage ensures that your own auto is repaired or replaced if you are involved in an accident even if it is your fault. Comprehensive and Collision are the most popular vehicle insurance coverages and they are normally sold together that makes a policy full coverage.
A full coverage policy includes three essential elements; Liability, Collision and Comprehensive. It is not difficult to see why most people would want to have full coverage car insurance to make sure they are protected against the largest possible damages they may suffer, especially if they have a valuable vehicle. Even if you don’t buy any other coverages, most agents and experts would recommend having a policy with these three components. Indeed, around 74% of motorists in the US have full coverage.
Collision and Comprehensive are optional coverages. However, they are not so optional when you have a large investment on your automobile. And people who took out a loan to buy it are required to include these by their loan provider.
- Uninsured/Underinsured Motorists Coverage
22 states mandate inclusion of Uninsured Motorists Bodily Injury coverage within the minimum requirements. This coverage pays for your and your passengers’ injuries in an accident caused by an uninsured driver. If you live in a state with high numbers of uninsured drivers, you should take this coverage even if it isn’t required. Uninsured Motorists Property Damage coverage is the other component that pays for your vehicle damages in the same situation.
- Personal Injury Protection
In no fault states, Personal Injury Protection (PIP) is required to pay for your own and family members’ injuries, loss of wages and death benefits. Otherwise, you need to check if you have health insurance for your traffic related injuries or not. If you do, you may not need to buy it, although it provides additional coverage like loss of wages.
- Medical Payments
Two states require this coverage that pays your and your families’ medical bills. Otherwise, this coverage isn’t usually as extensive as PIP and you may not need it if you have health insurance.
- GAP Insurance
Guaranteed Auto Protection makes sure your auto loan is paid off when your auto is totaled even if you don’t get enough money from your insurer. You only need this coverage if you have a loan. In any case, don’t buy this coverage from your dealer. You have a better chance of getting it cheaper with your insurer and easier to cancel when you don’t need it.
- Rental Car Reimbursement
Rental car reimbursement or mobility coverage allows you to rent a suitable vehicle if yours is being repaired by your insurer. If you cannot get on with your life without your car and you hardly have any alternative transport, you should consider adding this coverage even though it might be expensive for what it is. If you have good public transport or access to another auto, you may want to save your money.
- Roadside Assistance
It is a good and fairly cheap coverage to buy through your car insurance company. It usually provides help if you need to kick start your battery, run out of gas or lock yourself out of your auto, as well as providing towing and labor. For a couple of dollars a month, you have the peace of mind that you can call someone if you run into vehicle related issues in the middle of the road.
- Custom Parts and Equipment
You don’t need this coverage if you haven’t made any modifications to your automobile or don’t need to carry any equipment in your car like a wheelchair.
- Accident Forgiveness
First of all, you need to be accident free for about five years to qualify for this coverage with most automobile insurance companies and several of them may even offer this coverage for free if you qualify. Otherwise, it may be a good option to pay to protect your good driving records and not get charged high rates for the first accident.
Every motorist needs to consider their own position, value of their automobile and budget to decide what car insurance coverages they need and which ones they can leave out to avoid paying too much money unnecessarily. Most agents would probably say the same thing that a full coverage policy takes care of most sizable damages you may suffer. Even if you have a tight budget, you should try to get it and take a look at all the other add-ons in light of your needs and budget.