Auto Coverages

What are the coverages for an auto policy (click here for a Glossary of terms) and how much do I really need, if any at all?  These are some of the questions we hear our customers asking.  See below for the details.

Do I really need auto insurance?

Yes, all drivers need auto insurance coverage. In fact, it’s the law in most states. You’re required to carry a minimum amount of auto insurance. Often, you can’t even get an auto loan or lease unless you first show proof of insurance. Although many of the different coverage types are optional, liability coverage is mandatory in most states. Liability coverage may help you meet state driving requirements; however, you should consider buying higher levels of coverage to provide greater protection for you and others.

Is the state minimum requirement enough?

In some instances, it may not be. While you must meet your state’s minimum coverage requirement, there are no specific rules regarding the amount of additional coverage you can buy.

How much auto insurance coverage do I need?

It is impossible to know the cost of damage you might incur in an accident. However, you should base your coverage amounts on your vehicle, your personal assets and other factors. It is important to review these criteria carefully and often so you can align your auto policy with your lifestyle.

What do I need to consider when choosing auto insurance coverage?

You should consider the following:

  • Choose your coverage limits carefully. You might be personally responsible for damages that exceed the limits you select. Consider whether you can afford this possibility.
  • Choose your deductible carefully. Choose one that you can afford to pay if an accident occurs.
  • Check with your lending source or leasing company before choosing a policy. If you make payments on your car, you may be required to have comprehensive and collision coverage at certain limits in addition to liability coverage.
  • Make sure the coverage is comparable to the vehicle you drive. It’s wise to have higher limits for vehicles that can cause more damage, like large SUVs.

How high should I set my auto liability coverage limits?

No one can predict exactly how much you would have to pay if you were to cause an accident. Ask yourself how you would pay for any damages exceeding your coverage limits. The higher your liability coverage limits are, the more expenses your auto policy may cover.

Should my auto insurance include collision and comprehensive coverage?

Everyone’s insurance needs are different. Some prefer to carry as much coverage as possible; others prefer minimum coverage. You should base how much insurance coverage to purchase on your individual needs, your vehicle, your lifestyle, and your assets. Keep in mind, you may be required to carry collision or comprehensive coverage if your vehicle is leased or financed.

How high should I set my deductibles for collision and comprehensive coverage?

Higher deductibles lower your premium, but increase the amount you must pay out of your own pocket if an accident occurs. Ask yourself how much you would be willing and able to pay on short notice.

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