Is there a formula, a secret method or calculation to figure out how much car insurance one would need? Really how anyone supposed to know how much coverage is enough? Just buy some and hope that will be enough when you need to make a claim?
How much auto insurance you need depends on your personal circumstances. Here are a few factors you should consider when you are thinking about the amount of coverage you want to buy.
1. Do you have any savings you can fall onto? If you do, you can have higher deductibles and save money at the start with premiums. Should something really happen you have coverage and you can use some of the savings you got at the start to pay for deductible that will have to come out of your pocket. This strategy is not advisable if you have no savings.
2. What type of automobile you own? If you own a cheap car that is not worth insuring you may be alright with buying only liabilities coverage. Another example, if you own an SUV you may want to buy more liabilities coverage since these cars are known to cause a lot more damages to automobiles they hit.
3. Do you have a loan on your car? Then it may not be optional to buy Collision and Comprehensive Coverage as your lender would probably want them. Also, you may have to buy GAP auto insurance as well to make sure you are covered if your loan goes upside-down. GAP insurance pays the difference between what you would be paid if your car is totaled and the current outstanding loan.
4. Are you risk averse? Then, you would probably want to buy more coverage than usual. For example, you may want to buy Rental Reimbursement Coverage or Legal Defense Cover even though you are not sure if you need them. In that case, you should check to see if the extra premium you need to pay is negligible or too much.
5. Where do you live? Risks of having an accident or being victim of an auto theft is much higher in cities. Therefore, it is more expensive to insure cars in cities. However, in the same way, car insurance policies are more valuable in cities as the risks you are facing are more substantial.
6. What is your income? Level of income can affect vehicle insurance decisions and purchase in many ways. If you are a low income driver you may be able to get cheaper auto insurance by joining your states low income insurance schemes. People think that richer people buys more insurance. This may be true but probably poorer people need better coverage since they cannot afford to pay for large losses on their own.
7. What is the main use of the vehicle? When you are arranging coverage the use can be as important as the cover as well. For example, you can buy pleasure only car insurance if you are not commuting to work with your car.
8. Do you use your car for business? Then, you may need to add business use to your private policy. If this is a regular occurrence you may actually need to buy business vehicle insurance.
9. How good is your health insurance? When you don’t have a good health insurance plan you may be pressured to buy Personal Injury Protection Cover for yourself and your family in case you are injured in an accident.
10. Do you own a classic car? Then, you may want to make sure that it is insured on a agreed valuation bases.
These are some of the considerations that can help motorists decide what type of auto insurance coverage and how much they need. In any case, personal circumstances and opinions are the key to choosing what you really need.