How Much Car Insurance Do You Really Need?
With most people driving or utilizing a vehicle for transportation daily, you can count on accidents happening on the road. When they do, car insurance is a necessary coverage to have as car repairs are expensive, and you may be liable for repairs to another involved party’s vehicle as well. But, how much car insurance do you really need? It’s important to take a look at this carefully and understand what your options are; your decision could mean the difference in hundreds or even thousands of dollars. We’ll take a closer look below at the different coverages and what they can mean for you.
Liability Only
Carrying liability coverage is required in most states and is the most essential insurance coverage to have. When you’re involved in an accident that is your fault, liability coverage will cover the cost of repair and/or replacement of the other involved parties car, as well as their medical costs. When you don’t have this basic insurance coverage, you can face serious financial consequences such as bankruptcy, wage garnishment, or being sued if you cannot afford the car and medical costs related to the accident. Always make sure you carry this insurance; it will not cover any expenses related to your vehicle or medical care, however.
Collision Coverage
This type of car insurance will cover car repairs and medical costs for both you and the other driver if necessary, no matter who is at fault. Collision coverage is required for most cars if they are financed; if you own your vehicle outright, this is typically your decision to make. Carrying collision coverage is highly recommended, however, as in the chance you are at fault, or the other driver is not insured, it means your property is still covered for repair or replacement; this can mean the difference between you maintaining transportation or not, depending on your financial means.
Comprehensive Coverage
Comprehensive coverage is essentially coverage for everything aside from collision with another vehicle. This auto insurance is often packaged with your collision coverage and will offer protection against damage from mother nature or theft of your car.
Personal Injury Protection
This is considered an add-on coverage in some states, is required coverage in others, and isn’t even available in some. Primarily, personal injury protection coverage (PIP) can help to cover medical and funeral expenses, child care needs, lost wages, and physical therapy resulting from a car accident.
Uninsured Motorist Insurance
Uninsured motorist coverage is not required, but it can come in handy. When you are hit by a driver who doesn’t stop, doesn’t have insurance, or doesn’t have enough coverage to handle the expenses of repair or medical needs, this insurance add-on will pick up the slack. With an alarming 1 in 8 drivers continuing to operate vehicles with no insurance at all, this may be something to consider.
Rental Coverage
This is another add-on coverage, but it can save you a decent amount of money if you end up needing a rental car for an extended period of time while awaiting repairs or trying to find a new car to replace a totaled car.
Guaranteed Auto Protection
Guaranteed auto protection (GAP) is only necessary for new vehicle purchases. This insurance will ensure that if your vehicle is totaled and you owe more than the car is worth on your auto loan, the full amount of your loan will be covered between the car insurance company and your GAP insurance. This insurance can save you a few thousand dollars depending on your financial situation. You can also cancel this insurance when you no longer need it, and it is reimbursable when you pay off the car loan.