Auto Loans, Insurance

Making Sure You Have Enough Car Insurance

Owning a car goes far beyond your ability to afford the actual payment. There are other costs to worry about, such as gas, maintenance and insurance. And like most drivers, keeping your insurance costs to a minimum might be a priority. But while everyone looks to save on car insurance, this savings shouldn’t be at the expense of adequate coverage.

Getting car insurance is the responsible thing to do if you own a car. It doesn’t matter if you strictly obey the rules of the road and drive safely, you can’t predict auto accidents. It only takes one careless act to damage your car or another person’s vehicle, and if you don’t have coverage, you could end up paying for damages out-of-pocket.

Car insurance is for your peace of mind. But it isn’t enough to have a car insurance policy – you need enough coverage.

When you’re shopping for car insurance, your budget may dictate how much you spend on a policy. There is no “one-size-fits-all” car insurance. Your agent can help you find a policy that best fits your needs and lifestyle. A policy that’s easy on your wallet is always favorable, but don’t quickly jump at the opportunity to pay cheaper premiums. In all likelihood, you won’t get the coverage you need.

1. Uninsured/Underinsured Coverage

Driving without car insurance is illegal in just about every state, but this doesn’t stop many drivers from getting behind the wheel without coverage. And since it’s estimated that approximately 14% of drivers in the United States are uninsured, the chances of getting hit by an uninsured driver might be higher than you think. Therefore, consider adding uninsured and underinsured motorist coverage to your policy.

Legally, an at-fault driver may be responsible for any damages to your car and your medical bills. But if he doesn’t have insurance, there’s a good chance that you won’t see a dime. The same holds true for underinsured drivers. Most states require a minimum level of car insurance, and of course, many drivers go with the lowest level, in turn, the cheapest premiums. However, if you’re involved in an accident with an underinsured driver, and this driver is at fault, his insurance policy may cover some of your damage, but not all. Uninsured and underinsured motorist coverage protects you in both cases.

2. Adequate Liability Insurance

There are different level of liability insurance, and going with the minimum level required by your state can hit your pocket hard. Not because of higher premiums, but rather because your liability coverage may not be enough to cover the other driver’s damage or injuries.

This coverage pays for any bodily injury or property damage that you cause, and the fact that you have liability insurance doesn’t mean you’re financially off the hook if you’re at fault in an accident.

Let’s say you go with your state’s minimum and acquire $25,000 of bodily injury per person, $50,00o bodily injury per accident and $25,000 property damage liability. At first glance you may feel that your policy offers adequate coverage. But what if the other driver sustains major injuries and his medical bills exceed $25,000? Or what if you cause more than $25,000 in property damage? Since your insurance company isn’t going to pay more than the value of your policy, there’s a strong chance that the other driver will sue and go after your assets – your bank accounts, house and other personal property.

Bottom Line

Everybody wants to save, and if you’re extremely careful on the road, there’s a chance that you’ll never make an insurance claim. However, skimping on car insurance simply to get a lower premium may not be beneficial in the long run. Talk with your agent and discuss adding uninsured/underinsured motorist coverage, as well as increasing your liability insurance. The difference in premiums may be cheaper than you realize.