Insurance
Insurance Coverages DeMystified
While different states have different auto insurance requirements, most require a minimum level of coverage that includes:
Liability coverage: There are two types of liability coverage (1) bodily injury and (2) property damage. Bodily injury liability coverage covers any injury suffered by another as a result of your driving and property damage liability coverage covers and damage done to another as a result of your driving. States vary on the level of liability coverage you should carry but a good rule of thumb is 100/300/100. This translates into $100,000 for bodily injury for another, $300,000 for everyone involved in the accident, and $100,000 for property damage.
Remember though this is a minimum and your actual coverage should reflect your level of assets: the more assets you have, the higher your coverage should be. If you are sued after an accident, the suing party may be able to go after your assets if your insurance coverage was not enough to cover their costs.
Additional coverage you can purchase includes:
Medical Payments coverage – immediate treatment of injuries sustained by you or your passengers
Personal Injury Protection - compensation for lost wages, funeral expenses, and pain and suffering
Uninsured Motorist coverage – where the other driver does not have liability coverage
Underinsured Motorist coverage - pays for the cost of your injuries that exceed the other driver's coverage maximum
Finally, don’t assume that your coverage includes theft or rental car coverage these are additional and may not be offered by certain insurance companies, and don’t forget that most policies have deductibles – or the out-of-pocket costs you must cover before your insurance kicks in.
While it may be tempting to get the cheapest insurance available it is a good idea to get the most possible coverage up front so you don't have to pay as much later on should an accident occur. The key is finding the most cost effective coverage keeping in mind that the minimal amount of coverage required by your state may not be enough for your own needs.
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