It can be tricky to craft an auto insurance policy that’s right for you. You need coverage that meets legal requirements, high enough limits to give you peace of mind and premiums you can afford.
Find Out Which Kinds of Coverage You Need
In most states, liability coverage is required. If you’re at fault for an accident, the liability part of your policy will cover the other driver’s injuries and property damage.
States don’t require drivers to have comprehensive or collision coverage, but lenders do. Comprehensive coverage will pay for repairs if your car gets damaged by fire, weather or vandalism; if you hit an animal; or if your car gets stolen. Collision coverage can cover the cost of repairs or pay to replace your vehicle if you’re involved in a collision with another car or if you hit an object, such as a fence or guardrail.
Some states require drivers to have uninsured/underinsured motorist coverage. Uninsured motorist coverage will pay a claim if you get hit by a driver who doesn’t have insurance. Underinsured motorist coverage will pay if an at-fault driver has insurance, but not enough to fully cover your claim.
A small number of states require medical payments or personal injury protection coverage. MedPay coverage can pay for medical care that you and your passengers receive after a crash. Personal injury protection can cover medical bills, lost wages, funeral expenses and other costs incurred due to an accident.
Decide Which Optional Forms of Coverage Are Worth It
It can make sense to have certain types of auto insurance coverage, even if you’re not required to. Uninsured/underinsured motorist coverage can shield you from steep out-of-pocket costs and give you peace of mind.
You might want to include MedPay or PIP in your auto insurance policy so your health plan’s deductible will be covered if you’re seriously injured in a crash. If friends often ride in your car with you, PIP can cover their injuries in the event of an accident.
Comprehensive and collision coverage can protect you from large and unexpected bills, but those forms of coverage might not make sense if you have an older car and/or significant savings. If you’re involved in an accident, you can pay for repairs yourself or buy a new car.
Select Appropriate Amounts of Coverage
If your state requires specific types of auto insurance, it will also set minimum coverage amounts, but it can be wise to get more coverage. If you’re at fault for an accident and you don’t have high enough coverage limits, the other party can sue you, and you can lose your house, savings and other assets.
Make Sure Your Auto Policy Works for You
Your coverage needs can change over time. For example, maybe you were required to have collision and comprehensive coverage because you had a car loan, but your loan is paid off. Contact your insurance company or agent to discuss your coverage and shop around to compare premiums.
