Const & Coverage
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How to buy enough car insurance so you're fully covered.
There isn’t a type of car insurance called “full coverage car insurance,” but some people use the term to refer to policies that offer protection for the full range of things that can happen when you’re a vehicle owner. These drivers want to know that no matter what happens on the road (or off), they and their vehicle are covered by their auto insurance policy. By getting the right combination of coverage types and amounts, you can ensure that you’re fully covered for anything that comes up.
Full coverage car insurance, while not a product itself, can be defined as a car insurance policy that fully protects you when you own a car. Such a policy would include not only the coverages and coverage amounts required by law but also the coverage limits appropriate for your financial situation and additional, non-required coverage types, too, like collision and comprehensive coverage. Full coverage will mean different things to different people, but will include a combination of the different types of coverage available include:
What it is: There are two types of liability insurance: bodily injury liability (BI), which covers medical bills for people you hurt in an accident, and property damage liability (PD), which covers damage to another party’s car or personal property in event of an accident.
How much you need: Most states require you to have liability insurance to cover property damage and bodily injury. Find out your state’s car insurance coverage requirements.
Though liability coverage is mandated in most states, the state limits are low and you almost certainly need more coverage than required. Here’s one way to think about liability coverage: if you cause an accident and get sued, how much could that party get out of you? A good rule of thumb is that your liability coverage limit should cover the full value of your assets. If you don’t have any assets, you could be okay with just the state-mandated coverage amounts, but be aware that you could be ordered to pay over time through garnished wages, etc.
What it is: Covers expenses for you or your passengers no matter who is at fault, including medical expenses and lost wages.
How much you need: Some states require some personal injury coverage, but if yours doesn’t, this might be a coverage type that you can forgo, since you may be covered elsewhere. You may need less PIP coverage if:
You may be able to use your PIP coverage to cover some wages if you need to be out of work, but disability insurance can cover the rest of your lost wages if you hit your PIP limit. But if you often have passengers that may not have their own health insurance, you may feel like this coverage is worth it, since it would cover their expenses, too.
What it is: Also called collision insurance. Covers damages to your car from an accident or collision when you’re at fault.
How much you need: Many people who drive old cars decide that it’s not necessary — the savings on their premiums justifies the fact that, if they get in an accident, they wouldn’t get any cash for repairs or to replace the car.
What it is: Also called comprehensive insurance. Covers damage to your car not caused by a collision, such as fire, theft, smashed windows, or slashed tires.
How much you need: Comprehensive and collision are both optional unless you lease your car or purchased it with an auto loan.
Many people also opt out of this coverage to keep their premiums low, but opting out does leave you open to risk: for example, if you’re car is stolen, it’s gone, and your insurance company can’t help you.
What it is: While window damage falls under comprehensive coverage, some insurance companies offer supplemental no-deductible glass coverage.
How much you need: Many people opt not to get glass coverage, but if you live in a city where break-ins are common, it may be worth it for you.
Car windows can cost between $100 to $500 to replace and windshields can cost even more, meaning that most glass repair costs are paid out of pocket and don’t hit the deductible.
What it is: Covers medical and/or property expenses incurred if you’re hit by a driver who doesn’t have insurance or whose limits are lower than your costs.
How much you need: Some states require some amount of uninsured motorist coverage, and some don’t. If you have health insurance and collision coverage, you may feel okay skipping this one, as both could cover some medical bills and damage to your car if the other driver was uninsured.
What it is: If you are still making car payments, gap insurance will pay the difference between the current market value of the car and the balance you owe on the lien in case of a total loss or theft.
How much you need: If you have a loan on your car, the bank or dealership will probably require that you have this coverage.
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There isn’t a one-size-fits-all car insurance policy — the right amount coverage has to do with your personal financial situation and your own comfort with risk. But an independent insurance broker can help you understand your coverage needs and ensure that you have the right amount of insurance so that you’re not overinsured or underinsured.
Many people don’t find out that they are underinsured until they make a claim and realize it’s not covered, or if someone else makes a claim against them and they end up with a big bill to pay. And being overinsured means you’re paying more each month than you need to be, and that’s not a great outcome, either!
A licensed Policygenius expert can help you figure out how much car insurance coverage you need to ensure that you’re fully covered.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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