Car Insurance Understanding
For many people, car insurance is a tricky process. There is so much to understand. For many insurers, it is in their best interest to tell you that you need the maximum level of car insurance. Obviously, you need car insurance, but how much? Is there such a thing as too much insurance? Understanding some key insurance terms can be important. It is then important to assess your personal circumstances and determine if you need more insurance.
Different Types of Car Insurance
Personal Injury Protection (PIP)—This insurance will cover those injured in your car, including yourself, up to $3,000. PIP coverage can pay regardless of whether you were at-fault or not.
Liability Coverage—This policy is meant to cover an accident if you are at fault. When you use this type of coverage, it usually means you were partly or fully responsible for the accident. This insurance will go to the people you hit. However, those injured in your car, as well as the property damage to your car will not be covered.
Bodily Injury Liability—This type of coverage will pay for the medical bills of people involved in the accident for which you are at-fault. These policies are sometimes are shown using a number to designate the maximum for a single person’s injuries and the maximum for all injuries. An example would be 20/50. These numbers mean a single person’s medical bills would be covered up to $20,000, and $50,000 would be the maximum for everyone’s injuries.
Property Damage Liability—This type of policy will pay for the property damage if you are at-fault in an at-fault accident. Often, this number will show up with the Bodily Injury Liability as the third number like 20/50/10 meaning your insurance will cover $10,000 in damage to the other party’s car.
Uninsured Motorist Coverage—This type of coverage is meant to cover your property damage if someone hits you without insurance or your car is damaged in a hit and run accident.
Underinsured Motorist Coverage—This coverage will help cover costs if you are hit by someone who doesn’t have adequate insurance coverage to cover your medical bills.
Collision Coverage—This coverage can cover the property damage to your car if someone hits you.
Comprehensive Coverage—This type of coverage will help cover the costs if your car is stolen or suffers property damage regardless of an accident.
What Insurance Should I Get?
Almost all states require car insurance if you are going to own and operate a motor vehicle. Many of these states require that you carry a minimum amount of insurance. In Utah, drivers are required to have two types of liability coverage, property damage, and bodily injury, and the minimum amount of coverage is $25,000/$65,000/$15,000. You are also required to carry Personal Injury Protection coverage (PIP). However, is the minimum enough insurance coverage for you?
The answer to this question largely depends on you and your needs. The problem with insurance is you only want more when you’re the victim of an accident. The Wall Street Journal advises collision and comprehensive coverage is worth having when you need to repair or replace your car after an accident. The Journal similarly notes getting adequate amounts for underinsured and uninsured drivers. This insurance can be relatively inexpensive for large amounts of coverage.
Essentially, you can acquire as much insurance as you’d like; however, that might also not be the best option for you. After seeing what the various types of insurance exist, as listed above, you should ask yourself, if you didn’t have that type of coverage and were involved in a serious accident, would that be devastating financially? If the answer is yes, perhaps you should purchase that type of insurance.
Obviously, people have differing insurance needs. Adequately assessing how much you need is a vital part of purchasing insurance for yourself and your family. Sometimes, it is helpful to speak with a trusted insurance representative. Sharing your situation and being quite candid with them can help in deciding how much insurance is right for you. Even calling other insurance agents and asking their opinion can be helpful. All in all, there isn’t a cut and dried answer to this question, each person needs to gauge their own insurance needs.
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