Understanding The Intricacies Of Insurance

Selecting The Right Level Of Car Insurance Coverage For Your Needs

There are many choices to make when purchasing a car insurance policy that it is easy for people to become overwhelmed or confused. After all, not only do you need to choose what coverage options to include in your policy, but you will also need to decide exactly how much of each type of coverage you want to carry. If you are struggling to accurately evaluate your car insurance needs, the tips below can help.

Make Sure You Have Enough Liability Coverage To Cover The Cost Of Replacing A Newer Vehicle

Most states require you to maintain a rather small amount of liability coverage as part of your auto insurance policy. The problem with purchasing a policy that only meets this minimal requirement is that you could still find yourself being held personally liable for damages in the event of an accident. This is because you can be held personally liable for damages that exceed the amount of coverage your insurance policy provides. The easiest and most affordable way to avoid this problem is by making sure your auto insurance policy includes enough liability coverage to cover the cost of replacing most newer vehicles. This will ensure that you have adequate coverage even if another driver's vehicle is totaled as the result of an accident you caused. 

Limit Your Collision Coverage To The Value Of Your Vehicle

Collision coverage is often an optional form of car insurance since it is not required by law. However, some lenders do require you to maintain collision coverage when taking out a loan to purchase your car. Even if you are required to purchase collision coverage, how much coverage you buy will still remain your decision. To make sure you have the protection you need without paying too much, you will want to limit this coverage to the resale value of your vehicle once you apply the deductible associated with your policy. For example, if your vehicle is worth $10,000 and you have a $1,000 deductible, you will not need more than $9,000 in collision coverage. This is because the most your policy will ever payout is the total value of your vehicle. If damage to your vehicle exceeds the vehicle's value, the insurance company will simply declare the vehicle totaled and pay you or your lender for the value of your car. If the value of your vehicle is rather low, you will likely find that this type of car insurance coverage is not a good investment for you. This same approach to evaluating your coverage can also be used to evaluate your need for comprehensive coverage. 

To learn more about what type of car insurance would work best for you, contact a professional near you.