By: Andrew Buchanan, Buchanan, Williams & O’Brien
When you’re thinking about how to best insure your vehicle to protect yourself and others on the road, you may wonder how much car insurance you really need. State law provides some guidance, but there are more factors to take into account when choosing a policy that works best for you.
Which type of car insurance is required?
Most states mandate that all drivers carry auto insurance policies. In 47 states and the District of Columbia, you must purchase a policy that meets state minimums. On the other hand, Arizona, New Hampshire, and Virginia allow drivers to opt for an alternate approach. These alternatives can be costly, however, because in all cases you are required to be financially responsible in case of an accident, and you may have to prove it in advance with an expensive bond.
There are four basic types of coverage that are included in the mandatory state minimums: body injury liability, property damage liability, personal injury protection, and uninsured/underinsured motorist coverage. In most states, you’re only required to carry body injury liability and property damage liability insurance, but you still may want to opt for additional coverage. In addition, some states and territories require car owners to have no-fault insurance. This type of policy can be expensive because it is guaranteed to pay out regardless of which driver was to blame for a crash.
Each state has three specified amounts of insurance that car owners must carry. These numbers are often represented as “10/20/10” or “15/30/5” on the policy itself. The first number represents the amount, in thousands, of mandatory bodily injury liability coverage per person. The second represents the same coverage limit per accident; for example, $20,000 or $30,000. The third number represents the amount of coverage you have for property damage.
Obviously, drivers may be found responsible for greater sums than those mandated by state minimums. Make sure to check your own state laws when selecting a car insurance policy.
Should I add any additional coverage?
If you’re responsible for a greater amount of damages than those covered by your insurance policy, you could be on the hook financially. It can be important to have at least as much liability insurance as the total value of your assets. Adding more liability insurance often does not add much to the cost of your policy, so it can be a good investment in self-protection.
When it comes to your own coverage, you can reduce your rates but still be protected in the case of a serious incident by choosing the highest deductible that you can afford. This choice can provide significant premium savings. Car insurance, ideally, should be in place to address major damages, not minor repairs. You’ll likely pay more for a low-deductible policy than by paying out-of-pocket for minor work. In addition, submitting collision claims for minor issues can drive up your premium even further.
In addition, you may need car insurance to cover your own costs. While you probably don’t need to invest a lot in personal injury protection for yourself if you have health and disability insurance, uninsured and underinsured motorist coverage can be important. If the other driver in a crash doesn’t have insurance, you can still be protected.
Collision coverage pays for repairs, while comprehensive coverage addresses issues like theft, vandalism or other issues. People with newer, more expensive vehicles may find these types of insurance particularly valuable and seek higher coverage limits.
You may also want to consider umbrella liability insurance. This type of secondary policy gives you added protection in case you are sued over your role in a car accident. This type of coverage kicks in when your regular insurance has too low of a limit to cover all of the damages in a crash. It can also provide assistance for your legal defense costs if you are sued. In general, adding an umbrella policy to your coverage may add little to your premiums, but it can be extremely valuable.
An insurance agent can go over the types of insurance that are available and help you to select the coverage that is best for you. Don’t be afraid to shop around to compare rates as well as the coverage provided when choosing an auto insurer.
When it comes to auto insurance, mandatory state minimums are only the beginning of the decision. By choosing the right auto insurance policy, you can help to protect yourself from any unexpected events.
Andrew Buchanan is a two-time SuperLawyer and partner at Buchanan, Williams, & O’Brien, a personal injury law firm with offices in Joplin, Carthage, and St. Louis, Missouri. Andrew Specializes in helping people who have been injured, with a focus on medical malpractice, automobile and truck accidents, product liability, premise liability, wrongful death, and work accidents.
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Image Source: Car Accident Used by permission Stock Unlimited.
