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Full Coverage Car Insurance

07 Oct

Purchasing car insurance is simply purchasing self-protection. Each time you buckle up, start your engine and proceed on the roadway, you become a potential accident waiting to happen. Whether you’re at fault or it’s the other person’s fault, the result is the same – a motor vehicle accident – someone is the victim and someone is at-fault. This is where your decision of purchasing car insurance is paramount.

Do I need full coverage auto insurance?

To answer this question, you need to know what your state’s minimum liability coverage limits are (they vary state-to-state) and any other insurance coverage requirements. Then, evaluate your personal assets, as well as your net worth, since they could be at risk should you’re involved in a serious accident and be found at-fault (this is probable even if you live in a no-fault state). Your liability coverage should amply protect your assets and net worth.

What are some other state insurance coverage requirements?

Some states, particularly no-fault states, require you carry a minimum of $10,000 in Personal Injury Protection (PIP). PIP coverage will pay for your accident-related medical treatment and expenses and lost wages, regardless of who was at-fault, up to the $10,000 limit.

$10,000 can be a “drop in the bucket” especially if you have been seriously injured. To counter this minimum coverage, some states require that you purchase underinsured or uninsured motorist (UM) coverage. Other states consider UM coverage as an “optional” coverage.

Medical payment (MedPay) coverage may be required in some states. MedPay covers all accident-related medical treatment and expenses up to its policy limits. MedPay limits can generally equal your liability limits. MedPay covers your medical treatment and expenses regardless of who was at-fault for the accident.

What is underinsured or uninsured motorist (UM) coverage?

UM coverage protects you against uninsured drivers or drivers carrying the minimum state liability requirements.

Do I really need UM coverage? Won’t it make my premium more expensive?

UM coverage is without a doubt the most important coverage you can have these days. With more and more people actually canceling or allowing their car liability insurance to lapse, the chances of you getting hit by an uninsured or underinsured motorist is growing everyday. The Insurance Research Council predicts that by 2016, 16.3% of drivers will be uninsured (that’s the national average – in some states, that percentage is already a lot higher).

If you are hit by an uninsured driver or someone who is carrying only the minimum requirements and you are seriously injured, you will have little to no recourse against the at-fault driver to be reimbursed for medical expenses, lost wages, other out-of-pocket expenses, pain and suffering, mental anguish, loss of enjoyment of life, permanent impairment, etc.

With UM coverage, you will be protected up to its policy limits. Typically, they are equal to your liability limits, but in some cases, can be less. UM coverage is an extra cost to your annual premium, but it’s definitely an investment for your protection.

Do I need collision and/or comprehensive coverage?

That depends on your vehicle’s fair market value. If it’s an old rattletrap, probably not – the premium and deductible will probably cost more than it’s worth. However, if it’s a fairly new car or one that has held its market value or one that you’re planning to keep for a while, collision and comprehensive coverage would probably be a wise investment.

Collision pays for damage to your car regardless of the cause. Comprehensive covers theft, fire, cracked or broken windshield, falling objects (i.e., hail damage) or any other unexpected problems. You can choose higher deductibles for collision and comprehensive coverage which should lower your premium.

Lastly, review all of your full coverage car insurance policies to ensure benefits are not duplicated and do your research.