Each state has its own requirements for how much insurance you need to hold as a car owner. It also depends on the year and make of your car, whether it’s new or used, where you live, your driving record, your financial situation, and more. Most Americans spend $120 per month on their car insurance. Here are a few options you should look into.
Liability insurance is required almost nationwide. Nearly all American drivers hold liability insurance, which is often required as a mandatory minimum (except in New Hampshire, which has none, and Virginia, where you can instead pay a $500 fee). Liability pays for the other person’s property damage and injuries if you get in an accident. Coverage pays for medical care and repairs to the vehicle and other damaged structures.
Liability operates with three limits summarized in a ratio of x/y/z. The first (“x”) is the maximum that insurance will pay to a single person for injuries due to an accident. The second (“y”) is the maximum paid to everyone you hurt in the accident. The third (“z”) is the maximum insurance will pay for property damage caused by the accident. More simply, this is person/people/property. States have minimums for the limits of each maximum. While you may be tempted to buy the minimum, those values may not cover your assets. The recommended values are $100,000/$300,000/$400,000. Buy enough liability to cover the value of your assets should you get in an accident.
Collision insurance is required to lease a vehicle. Just as it sounds, collision insurance covers damage you cause to your own vehicle as a result of a collision with anything. Depending on the value of your vehicle, collision coverage can be a good investment to protect it. As your vehicle ages and depreciates, however, you may want to consider dropping collision coverage. Once your deductible is higher than the cash value of your vehicle, drop your collision coverage.
Comprehensive coverage protects your vehicle from everything except collision. This includes fire, theft, natural disasters, and unexpected problems. Comprehensive coverage is inexpensive and at fair market value for your vehicle, so it is recommended.
Personal Injury Protection
Personal injury will pay for the medical bills of the insured and their passengers. If you have good health insurance, you may not need this. If you often drive a carpool, this could be an important option for the health and safety of your passengers.
Many drivers (around 13 percent) drive without car insurance. This coverage is crucial because if you are in an accident and the other driver does not have car insurance and cannot pay for damages, your uninsured motorist insurance will pick up the bill.
For all of your property and casualty insurance questions, contact Redwood Agency Group.