Insurance is a relatively ambiguous term. It’s up to the owner to find out what policies are provided and, most importantly, what all is excluded or hard to discover in the fine print. So, the question remains: how much is actually enough and what are the costs, right from personal injury to property damage and unexpected liability protection. Herein we explain the breakup of auto insurance.
- Go for more always
Before you think that paying the minimum premium is enough, know that one in eight car drivers does not have automobile insurance. This means you will have to be extra vigilant and cover all your bases to avoid paying money out of your pocket. And if you drive an expensive automobile, buy insurance above the state limits. It is better to pay upfront and avail a high deductible expenditure that recurs monthly rather than pay a lump sum for personal and property damages when the aggrieved party sues.
- Types of policies
Always check liability coverage, personal injury protection, uninsured or underinsured motorist protection, collision insurance, gap insurance, and additional coverage clauses. All these inclusions will determine the cost of your total insurance. It pays to consider all factors and protect your assets, personal and otherwise, in advance.
- Adequate insurance
The next step is to calculate how much insurance you can pay for adequate coverage. Auto experts suggest paying for uninsured or underinsured coverage primarily to protect yourself from reckless and ignorant motorists. For example, most states don’t charge more than $40 per $100,000 coverage. These amounts are negligible and provide all-year coverage. You must then provide for collision coverage necessary for repairs and replacements. About $50 collision coverage brings your total monthly expenditure to $90 dollars each month for basic coverage ($1,100 per year).
- Additional insurance
Over the basic coverage, you also pay for protection against bodily injury claims, property damage costs, unforeseen circumstances like fire or theft of the vehicle, and medical expenses of persons involved in an accident. The cost also varies, depending on where you reside or which vehicle you own. For example, New York, Washington D.C., and Michigan rank among the most expensive states for car insurance. But it is relatively cheaper to buy automobile insurance in Maine, Iowa, or North Dakota. On average, you may additionally spend about $600/year for physical injuries and property liability, about $360/year for collision costs, and about $160/year for comprehensive protection.
- Beneficiary clauses
Basic coverage is a mandatory requirement across most states. If you own a vehicle, you will need some auto insurance. But, you will also benefit from no-fault clauses that are mandatory in some states. With this clause, it does not matter who is at fault as the insurance provider will pay the claim and not restrict your rights to sue the party at fault. Currently, there are 12 states in the country that offer this benefit.
