Do you understand the kind of car insurance you have or should have? Or are you at the mercy of your agent and insurer, just trusting them to take care of you?
I don’t know about you, but I’m not about to just trust someone else to manage such an important area of my life. If you’re overinsured, you’re wasting money. If you’re underinsured, your financial life is at risk. How do you find the right middle ground? The place you need to be?
16The first thing to do is educate yourself about what types of car insurance coverage are available. Different insurers offer different types of coverage. If you have any kind of specialty automobile -a classic car, a hot rod, an exotic sports car – you’ll also need specialty insurance. If you have auto insurance now, get your policy out and read it over. Then get on the internet and start searching for explanations of the insurance terms you don’t understand.
To get you started, I’ll go over a few of the most common types of coverage:
Comprehensive: This is an overall blanket type of insurance that covers everything – except damage from an accident. Comprehensive coverage comes in handy if your car is outside during a hailstorm and left with little dents all over it or if it’s hit by a falling tree and destroyed. You’d also be covered if someone vandalized your car (broken windows, scratches from keys, etc.).
Liability: This covers all the damage and medical expenses for someone that you injured in an accident. Most states require that you carry liability coverage and set a minimum you must have. Be sure you pay attention to the amount your agent offers you. What most people get is really not enough. In many states, the minimum coverage is $10,000 per person or $30,000 per accident. If you have just one person hospitalized after an accident, it could easily add up to more than $30,000. The rest would have to come out of your pocket. So, depending on your financial situation, consider the amount of your liability coverage very carefully.
Personal Injury: This is the part of your policy that covers your injuries and medical expenses. Again, most states have a minimum limit that you have to carry. But this may or may not be enough for you. Do you have any other medical insurance? Maybe you and your family are covered by your employer. If so, you’re probably fine with the state minimums. If you don’t have separate medical insurance, you may want to increase this coverage for financial protection.
Collision: If you have an automobile loan, more than likely your lender will require collision insurance. It covers damages that you cause to your vehicle. The deductible on this type of coverage can be increased or decreased – the lowest deductible I’ve seen is $250 – but I imagine you could find a policy with no deductible if you look hard enough. It would cost you a bundle though.
Your agent or insurance company can give you a lot more details on all of the different types of coverage. Take a look and decide what limits work best for you.