What do you need to know about car insurance?

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Here's what you need to know...

  • You must have at least the state minimums in coverage when purchasing car insurance to be compliant in your state
  • You may need more insurance coverage than the minimums to make sure you are covered in an accident
  • Avoid personal injury lawsuits and fees by carrying no-fault insurance
  • Know your state laws to make sure you have the minimum required coverage

When you are shopping for car insurance, looking to change your current plan, or just seeing how you could add on to your current auto insurance policy, make sure you have your personal information and driving record to ensure you receive the best deal.

What are the most important pieces of information that you need to make the most informed decision?

Make sure you get the right coverage for the best price. Enter your zip code to start comparison shopping today!

State law requirements

First, when shopping for insurance, you will need to know what your state-required minimums are. Each state sets their minimum required coverage. In most states, this required coverage includes

  • $25,000 per injured person for bodily injury.
  • $50,000 per accident for bodily injury.
  • $10,000 for property damage.

Check your state requirements to ensure that you are in compliance. These coverages are usually listed as 25/50/10 when you shop for coverage and on your insurance policy.

The first number always represents the state minimum on bodily injury per injured person; the second number represents the amount per accident for bodily injury, and the third number is the amount required for property damage.

How much is enough?

You will also want to make sure you have enough total insurance to cover your personal auto, in case you have to repair or replace it. Estimate the total cost of your vehicle as a trade-in on the Kelley Blue Book as a starting place. They will estimate what you would need to repurchase a similar car at the time you have it appraised.

Keep in mind that; you may not be able to locate the same make and model in the same condition. So you should purchase more collision insurance than the state requires and lower your deductible as needed, to ensure that you will be able to replace your car if it’s totaled.

Personal injury protection

Another type of insurance you may want to look into is personal injury protection (also known as no-fault insurance). This insurance will kick in where your regular coverage leaves off, in the event of a potential lawsuit due to injuries a plaintiff received if you were at-fault.

Also, this insurance may also protect you from having large increases in your premium due to having a citation on your record, in some cases.

What is car insurance for?

Remember that the purpose of car insurance is so that you can avoid the legal repercussions of a lawsuit, high attorney fees, and other costs you may incur in the event you are sued by someone for damages. Insurance, itself, was required to curb the number of tort cases and lawsuits. Insurance pays the costs that you would have to pay yourself if you did not carry it.

Identification requirements

Most states require that you carry your insurance identification in your car with you at all times. There are penalities for failing to do so, and this will go on your driving record if you are pulled over and you cannot produce your identification card.

You will receive your insurance identification card when you receive your policy and after your first premium payment has cleared. Keep this with you in your car at all times.

Insurance premiums

The amount of your insurance premium will vary, depending on how much coverage you purchased at the time the policy was issued.

If you purchased optional add-ons such as roadside assistance riders or car rental privileges, it would be more than if you had left these options off.

One other option is uninsured motorist coverage, which covers the costs when someone without proper coverage causes an accident, and they cannot pay for the expenses.

Weighing the risk with the premiums

The amount of car insurance you decide to carry should always be weighed between the amount of premium you can afford to pay and the level of risk.

If you drive a lot, such as commuting to work every day over 100 miles, take lots of vacations to faraway places, or carry other passengers with you regularly, you may want to raise your amount of coverage.

Your responsibilities with insurance

Carrying the state minimums is all that is required legally, but you will want to consider how much money you would owe in “out-of-pocket” expense if you were to have an accident where people were injured, or property was damaged.

Also, consider your loss, including injury and damage due to the negligence of another driver and let that also be a determining factor in deciding the amount of insurance you should carry.

How to know you have a great insurance company

Buying car insurance is a major step to for peace of mind as you travel the highways and byways of life. It is not a decision to be taken lightly. To make sure you have a great company, follow these tips:

  • Find a company that has several options in plans and coverage.
  • Pick a company with agents who listen to your needs.
  • Ask lots of questions until you get the answers you need to make an educated decision.
  • Compare premiums between similar companies to see which one offers the most for your money.

These are just a few tips to determine if the company you are considering offers you everything you need to your car insurance plan. Talk to the representatives when shopping and comparing online and get your questions answered before buying. It’s not only your right. It’s your responsibility.

When comparing insurance plans, weigh the risk with the monthly premium, keep your driving record as clean as possible, and be a responsible driver. These things will keep your premiums from going up drastically due to negligence on your part.

Start comparison shopping today by entering your zip code in our FREE comparison tool!

References:

  1. https://wallethub.com/edu/switching-car-insurance/13553/
  2. http://www.cars.com/go/advice/Story.jsp?section=ins&subject=ins_req&story=state-insurance-requirements
  3. http://www.kbb.com/new-cars/?hpnav=true
  4. http://www.investopedia.com/terms/u/uninsured-motorist-coverage-um.asp

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