After buying a new vehicle, there’s always a recurring dilemma that’s hard to ignore: how much auto insurance coverage should you get. On one hand, being prepared for the worst, that is, taking the most comprehensive auto insurance is smart – but costly. On the other hand, getting an insufficient coverage, and paying lower amounts of premium, may cause us to later pay dearly (literally speaking).
If you are like me, many times you pick the easy road, and just take the default option, or the most popular one. But that is not the right way.
The right way to determine the amount of auto insurance coverage
First, you must remember that the amount of car insurance, quite obviously, should be customized to the requirements of you and your family.
Second, you want to avoid paying too much every month, and yet you need to be prepared for the most likely – statistically speaking – scenarios. The trick is in striking a balance between choosing the most important aspects in the insurance and paying a reasonable amount.
Third, you must keep in mind that auto insurance rates are also affected by various factors out of your control such as gender, credit rating and age. The location of your residence also plays a major role for two reasons, both because are some neighbourhoods are more dangerous than others (again, statistically speaking), and the second reason, is because auto insurance criteria in every state are governed by a different set of standards and rules.
A good starting point would be to start with the minimum coverage you need to buy in your particular step, and the range of protection offered by this coverage. Once you do this, you need to find out other options and how much they would could.
For example, if you do live in a bad neighbourhood, it might not be a bad idea to go with a comprehensive coverage plan, which covers your primary vehicle and any other vehicle you own, and protects you against losses that may be incurred for many different reasons, including collisions – and also protects you if your car is damaged or stolen.
If you drive a lot, you should probably get collision coverage, which offers coverage for the damage caused to your vehicle in case of an accident – all the repair costs minus the deductibles are covered under this scheme. That being said, if your car is pretty old, then this scheme may not help you as the amount of coverage depends directly on the value of your car – in this case, you probably want to skip this type of insurance.
Additionally, if you drive a lot in the city, you may want to opt for medical coverage, which protects you against medical expenses for you or anyone hurt in case of an accident – you may even be covered (depending on the plan) if you, while being a pedestrian, are injured in an accident regardless of whose fault this is.
Uninsured motorist coverage is highly recommended as well, as it will protect you in case your vehicle is hit by an uninsured driver.
In conclusion, you need to weigh your personal circumstances and factor those in. Once you see things from this perspective, making the decisions of the amount of coverage – and options to choose from – should be much easier.
