Many people view car insurance as a necessary evil. Making monthly insurance payments, especially when you’ve never had an accident, seems like a waste of money. But when you DO have a claim, auto insurance can be a financial lifesaver. Besides — and this is no small detail — automobile insurance is required by law.
Herein lies the age-old question: If you’re required to have car insurance, exactly how much do you need and what kind of coverage should you buy?
To help, we’ve put together a handy guide to assist you in identifying the type of insurance, and the amount of coverage, that’s right for you. All of this information will be helpful to know when it comes time to obtain a car insurance quote.
Auto Liability Insurance – The Basics
Let’s start with the basics. Auto liability insurance protects the person you hit if an accident is your fault. It’s divided into three numbers representing dollar amounts for three types of liabilities. For example, if you purchased an auto liability policy of 25/50/15, you would have $25,000 of bodily injury coverage for one person injured in an accident, $50,000 of bodily injury coverage for everyone injured in an accident and $15,000 of
Step 1: Decide How Much Coverage You Need
To find the right auto insurance, start by figuring out the amount of coverage you need. This varies from state to state, so take a moment to find out what coverage is required where you live. You will find a list of each state’s requirements and an explanation of the various types of insurance in “How Much Car Insurance Do You Need?” Also, check out “Little-Known but Important Car Insurance Issues,” which has a glossary of basic insurance terminology. If you’re a first-time driver and need a comprehensive overview of car insurance before you go on, review this guide from the National Association of Insurance Commissioners. Now you’re ready to make a list of the different types of coverage you are considering.
Once you know what’s required, you can decide what you need. Some people are quite cautious. They base their lives on worst-case scenarios and insurance companies love that. Insurance companies are in the risk business, and they know a policyholder’s likelihood of being in an accident, as well as how likely it is for a car to be damaged or stolen. The insurance company crunches
Here are four key steps to take when it comes to switching car insurance:
1. Review your current driving situation.
Take note of your driving circumstances as well as the needs of other drivers in your household. Do you have a newer model car? Do you commute several miles each week to work? Do you have recent traffic tickets?
According to the National Association of Insurance Commissioners (NAIC), your potential new insurance company may ask you all of these questions as part of the underwriting process. You’ll also likely be asked about the number of drivers on the policy, your driver license information, and the insurance coverage and limits you’d like to purchase.
Take a look at your existing auto insurance policy. Knowing what you currently have will make it easier to create apples-to-apples comparisons with the rates you receive from different insurers. An easy way to do this is to study your current policy’s declarations page, says Vaughn Graham, president of Rich and Cartmill insurance company in Tulsa, Oklahoma.
“The declarations page describes the insurance you have, including the amount of coverage as well as coverage limits, and the amount of your deductible,” he says. When you’re more
Don’t Risk Fines and Impound
The next time you’re on the freeway, think about this: Approximately one of every seven U.S. drivers on the road has no automobile insurance. That’s the most recent estimate from the Insurance Research Council, which noted that the five states with the highest percentage of uninsured drivers were Florida, Mississippi, New Mexico, Oklahoma and Tennessee. With that many people driving without coverage, it’s more important than ever for you to be insured. But how much car insurance do you need to have?
If you’re like many people, you might be in an economic pinch these days. Your inclination might be to get the minimum insurance coverage required by law in your state. The trouble with minimum coverage is that it might not fully protect you — or your assets — if you’re at fault in an accident. It’s a better idea to carry more than the minimum coverage unless you are driving an older car with little value and have no assets to protect.
Every state in the nation except for New Hampshire requires you to have liability insurance. That