Determining the Appropriate Insurance for Your Vehicle

The right car insurance revolves around your personal needs and desires as well as what your state requires. The required amount of coverage changes with each car you buy and every time you move to a new state. Understanding what is important and what you need before signing up for insurance is pivotal for proper protection and full compliance with the law.

Liability coverage

When you cause a car accident, you pay for the damages and medical expenses associated with the incident. Per The Wall Street Journal, liability coverage is split into two categories: property damage liability insurance and bodily injury liability insurance. Property damage covers car destruction like fender benders, door dings and ripped bumpers; while bodily injury backs the hospital visit expenses and lost wages of those injured. Liability coverage is the first aid to your rescue if you find yourself in a lawsuit. How much money you receive depends on your liability limits for a person’s injuries, total injuries per accident and property damage per accident.

Comprehensive coverage

Comprehensive coverage centers on other motor vehicle misfortunes that do not involve other cars: think damage from natural disasters, hail damage or a collision with a deer. This also includes matters of theft and vandalism. However, Kristen Hall-Geisler of U.S. News & World Report notes that comprehensive coverage does not cover any damage causes if your vehicle collides with a fixed object like a tree, building or light post.

Collision coverage

When you crash into any object other than an animal, collision coverage helps you with repair costs. This remains true when you drive someone else’s car. Depending on the state you are in, rental car accidents factor into this as well. Roll-over and hit-and-run accidents are also candidates for this policy. Keep in mind that collision coverage will require that you pay a deductible.

Extended coverage

There are several extended insurance options that cover issues not encompassed by liability, collision and comprehensive coverage. Per WSJ, personal injury protection aids with expenditures if the end result of an accident is a disability. This includes medical costs, 60 to 80 percent of lost income, funeral expenses, child care and even lawn work. According to Lacie Glover of NerdWallet, Medical payments coverage assists with hospital expenses for you and anyone else in the vehicle with you. Uninsured and underinsured motorist coverage works in accidents where another driver is responsible and either has no insurance or inadequate insurance to cover your expenses.

Guaranteed Auto Protection, which Hall-Geisler notes is commonly offered by car dealerships, comes in handy when you finance a brand-new vehicle without cash and wreck it or have it stolen shortly after. GAP covers the market value you lose after purchasing the vehicle from the dealership, which adds up to 25 percent of the vehicle’s overall price.

Premium coverage

The most advanced auto insurance can offer additional luxuries to your plan, but with a price. Hall-Geisler recommends roadside assistance to cover tows to a repair shop, battery jumps and changing flat tires, keeping you protected in an unfortunate but non-accident-related event. This is a particularly useful add-on if you do a lot of traveling.

Some other premium coverages are more needs-specific. In his blog, financial expert Dave Ramsey recommends pay-per-mile insurance for vehicles that are not driven terribly often; your bills are based on the number of miles actually driven, which is calculated by a GPS installed in your car. Umbrella insurance is an add-on for your liability coverage if you exceed the limits of your current plan, and Ramsey says it’s probably necessary if you have a net worth of $500,000 or more. If you live next to a golf course or baseball diamond, you may want to opt for glass coverage, which pays for the cost of repairs or replacements for your vehicle’s windshield or windows.

As you continue to research these policies and plans, discuss any questions or concerns you have with your insurance agent. By understanding what you’re required to have and what you feel comfortable carrying, you can keep your insurance bills reasonable without having to worry about being left holding the bag in the event of a collision.

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One Response to “Determining the Appropriate Insurance for Your Vehicle”

  1. Graham Ashley says:

    Hi Diane,

    Thanks for reading!

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