Accidents happen. In the blink of an eye. In a left-hand turn. Life can throw you a curveball.
Thats what happened to Maggie. It was a few days before Thanksgiving. Her daughter was home from college. The two were out having a great morning catching up. Then, as Maggie turned out of a shopping center, her SUV hit an oncoming minivan and flipped it onto its side. The accident happened so fast. Maggie and her daughter are still unclear how it happened. Luckily, no serious injuries occurred. However, the passengers in the other vehicle sued for musculoskeletal and emotional damages. Years of court hearings followed.
Thankfully, Margaret had adequate car insurance. Her provider took care of all the legal proceedings and settlements. Insurance also covered the damages sustained to her SUV. Margarets story goes to show that accidents happen when you least expect them. They can happen to anyone.
Without the proper insurance, car accidents can be financially devastating. While most states require some level of car insurance, is the minimum enough? How much car insurance do you really need?
Understanding Your Auto Policy
To understand how much car insurance you need, its important to understand what your policy covers. Car insurance is a conglomeration of many different types of policies. These include:
This insurance policy covers the occupants of the other car when you are at fault. It also pays for damage sustained to their vehicle. Youll typically see the policy broken into three categories:
- bodily injury per person
- bodily injury per accident
- property damage.
The liability coverage amounts appear on your policy statement as three numerals, XX/XX/XX. For example, if you have a 25/50/10 policy, insurance will cover up to $25,000 in bodily injury per person, $50,000 in bodily injury per accident and $10,000 in property damages. Any additional expenses fall to you. When thinking about how much is enough, best practice calls for holding enough liability insurance to cover the total value of your assets.
Personal Injury Protection (PIP)
Where liability coverage protects passengers in the other vehicle, personal injury protection covers you and your passengers. Most PIP plans carry a deductible. If you are not required to carry PIP, check your health insurance policy to see if it covers your needs. If you choose not to get PIP, look at long-term disability coverage in case an accident takes you away from work.
Uninsured/Underinsured Motorist Coverage
What happens when youre involved in a hit and run? Or the driver of the car that hit you doesnt have insurance. This is where uninsured/underinsured motorist insurance comes in. If you live in one of the more than 20 states that require this type of coverage, opt for the minimum. If you live in a state that does not require this type of insurance, it can be a good supplement. Look into a small policy that will cover costs uncovered by your health insurance.
Collision and Comprehensive Insurance
Collision insurance covers repairs to your vehicle when you are at fault. Comprehensive insurance covers damage done by forces other than a collision, for example, a hail storm. It also shelters you if your vehicle is stolen. Can you afford to replace your car outright? For most people, this would be a financial hardship. Collision and comprehensive insurance provides peace-of-mind and needed protection. Especially if you count on your vehicle as your main source of transportation. Dont pinch pennies in this area. If youre worried about monthly insurance costs, select the highest deductible you can afford. This will help you lower your monthly premium.
Several other forms or car insurance also exist, including:
- Extended Warranty Coverage
- Medical Expense Coverage
- Guaranteed Auto Protection
- Mechanical Breakdown
- Rental Reimbursement
- Roadside Assistance
- Accident Forgiveness
If youre trying to determine what coverage is right for you, talk to a SelectQuote agent. They can help you determine how much insurance you need based on your circumstances. And help you find the best policy.
The key to how much insurance you need lies in your ability to protect your family and passengers should an accident occur. Accidents can happen at any time. They are not planned, not intended. Maggie was grateful she had adequate insurance when her day went from good to awful. Talk to your insurance provider to ensure youre adequately covered as well.