Car insurance is always a tricky balancing act for people who are trying hard to make ends meet. If you can afford a fully comprehensive insurance policy, then you do not need to worry. You will have to start contemplating what to do only when you do not have the spare cash to pay for a fully comprehensive and all frills insurance policy.
If you are getting car insurance just for the sake of abiding by the law, then it will not cost you much. But this is a very risky move given that you might have to pay heavily if you ever meet with a serious accident. Strictly speaking, you must not go for this option unless you drive a washing machine on wheels and you do not own any assets. But for everyone else, there is a need for some serious contemplation.
What happens when you meet with an accident?
The case is that the car insurance policies of both the parties will kick in normally. But if the fault of the accident is solely due to one party, then that party’s insurance policy will have to kick in for both the said party’s. And if that insurance policy is not sufficient for the damages/injuries sustained by the other party, the other party can sue in order to recover the excess monies. In such a case, litigation might result in the assets of the party which was at fault, being attached by the court. This is the problem with having no insurance or being underinsured. If you have a lot of assets, you will end up losing them if and when you are found to be at fault in an accident.
The basic car insurance requirements for all states in the United States of America enforce a three pronged coverage system. The first part is the coverage for an individual who is injured or killed in the accident. A minimum amount is set by each state for such an incident. The second part is for all the people who are injured or killed in the accident. This maximum amount will cover all the individuals involved in the accident. And the third and last part is for all the property damage accrued as a result of the accident. If in any one of the parts, the expenses are not totally covered by the insurance policy of the offender, then the victim can take the case to court for covering the expenses by attaching the assets of the offender.
In a few states there are other basic requirements like getting insurance for covering all personal medical expenses after emergency treatment and coverage for cases where the offending party is underinsured or uninsured. This is done so that the state does not incur expenditure due to cases being taken to court and also there is the hassle of dealing with such a large number of cases in an already over loaded legal system.
When it comes to how much insurance you need, it’s a personal choice once you get the basic state requirements. Anything over this is the amount of money that you can afford to put aside every year for the sake of safeguarding your assets and investments. It also ensures that you do not need to worry about unforeseen expenses that might be accrued in the case where you are underinsured.
