Basic liability automobile insurance only includes legally required limits and may be slightly more. But there are many commonly sold packages that include many optional covers to be sufficient and safe for most people. And the price difference may not be as wide as you think. That is why it is always worth checking what you get for the money you pay. Then, you need to decide if you are happy with the provisions, conditions and premium or you want more.
There are some common pitfalls to avoid in this process that help you prevent serious problems down the line. If you do not have the right policy, you could be on the hook for tens of thousands of dollars in damage payments. Forgoing a premium increase of a few dollars a month, as you will see below can be ‘a pennywise but pound foolish’ mistake. Find out what typical car insurance coverage you need to avoid financial difficulties.
Poorly Designed Minimums
Almost every single state requires drivers to have mandatory liability but its limits are often laughable. For example, the minimum amount Arizona set is 15/30/10, which equals $15,000 for single person, $30,000 for multiple injuries and only $10,000 for property damage should you be at fault for an accident.
Now if you compare that with the average settlement or court awarded figures in serious injury incidents you get a bleak picture. Most legal experts suggest that claims could be inflated two to four times when you add pain and suffering and other legal and administrative costs. Typically severe car accidents can routinely total up to $50-$100,000. Could you afford $20-$70,000 in payments over what basic policy would compensate?
Consider, that on average you will be involved in 3-4 accidents in a lifetime and that auto crashes are the leading cause of injury in the US with 2.5 million Americans going to an ER and over 200,000 victims being hospitalized annually. This may be a simple reading but it would be a problem if you were to cause a collision that result in harm and more. Opt for a much higher liability than the basic like 100/300/50 that should cover most cases where you are at responsible.
On the other side of the equation for settlements, you have the risk of uninsured motorists hitting and hospitalizing you. In the same scenario above, if you are the victim of such a driver that person may not be worth the amount of the claim and declare bankruptcy leaving you with only bills. If you were hit by a a rough driver, which in the US ranges from 10 to 20% of all drivers, you may end up with no compensation from them. When you increase Liability limits uninsured motorist limits increase by the same amount too, providing you have it.
Not-So Optional Coverage
Below recommendations are about helping you see the value of optional extras that comes with a typical full coverage vehicle insurance. They are there to protect you by paying for own damages and faults. They help safeguard your assets at the time in order to make sure you are not worse off.
It is very important to know that liability compensates only third parties assuming you are responsible for the losses. If that is all you have, you are left alone with own damages and injuries. That is why you need to consider the following extras to ensure you are not left high and dry.
First you should have Collision Coverage to protect the value of your own vehicle, especially if it is less than 8 years old. To replace a vehicle totaled in an crash or stolen can be an expensive proposition, especially when the prices have been steadily increasing. In 2015 used car prices jumped 8% representing a bigger problem in such scenario. For just a few extra dollars in premiums a month, collision would protect the vehicle in case it needs accident related repairs or replacement, no matter who is at fault.
While you are looking into your own losses, it is always wise to add Comprehensive Coverage as well. It pays for damages to your automobile from fire, theft, flood, storm and and other mishaps like tree falling onto it. C and C may be sold together but not always. Liability, Collision and Comprehensive are the three essential components of a standard full coverage auto insurance.
Secondly, most people should have additional Medical Payments or Personal Injury Protection for traffic related incidents. Often your own health plan is not enough to meet the mounting costs of auto accident injuries that can include time off work, hospitalization, recuperation time and therapy costs. Hospitalization alone for such a case can be over $50,000 on average.
Lastly, get Uninsured Motorist Coverage. They are often automatically added to policies in the same amount you offer to third parties. Make sure to get it; especially if you live in a region with high numbers of such drivers.
Avoiding Catastrophe when on a Budget
If you are like most Americans, you survive on a standard budget that has little room for major financial expenses. An auto accident can often have many injury and property costs. You may not be unaware of them but that doesn’t prevent you facing them unless you buy a decent policy. Have a good look at above tips to make sure you have what you need.
If it is damaged and requires repair, can you go without a vehicle for several weeks? If you desperately need a vehicle for the commute, a few hundred dollars for a car rental can really stretch the budget. Consider adding Car Rental Reimbursement if this is a concern for you. Usually, it is not an expensive add on but you should check the price and decide if it is worth the money.
Have you seen towing and labor charges lately? Often in the area of $500. Always worth checking if there is a this option available and how much it is. A breakdown can happen even with a brand new auto.
Typical automobile insurance with full coverage can be bought cheaply as many companies are offering them. You may be surprised to see how you can improve the current arrangement affordably if you compare prices before buying it. So, don’t settle for an average package and go for a better one.
Find out how you can get great a low cost deal that includes all these bells and whistles. Our quote platform above would be able to help you locate the best companies in any zip code very quickly. The rest is up to you to make the most of options available.