While buying auto insurance many people buy what is needed by the state and they do not evaluate their own vehicle insurance needs. Buying the bare minimum definitely lowers premium costs but it also makes the person liable to pay for damages at the time of an accident. This article will help you understand how to determine your own auto insurance needs so that you can opt for a suitable cover.
State Laws
The state laws govern your actions while you buy auto insurance. Depending on the state you live in you will be required by law to opt for certain liabilities and the state will also govern the minimum cover for these liabilities. Property damage liability is mandatory in 15 states of USA and bodily injury liability is mandatory in most states. The minimum limit of these two liabilities depends on the state you live in.
Liabilities
There are various auto insurance liabilities to choose from and while some of these liabilities are mandatory others are not. The right way to buy insurance is to understand your requirements and buy additional liabilities so that your requirements are met. Collision and comprehensive cover are two liabilities that should be taken by every person who has a new or expensive car since these two covers are very beneficial.
Collision cover pays for all repairs when your car is damaged during an accident and this cover also pays for replacement of your car. Comprehensive cover pays for repair costs and replacement costs if your car has been damaged during a natural calamity or it has been a victim of street vandalism. These covers are not suitable for old cars or really cheap cars so while considering these two covers as an option you should keep the value of your car in mind.
Options
At the end of the day how much money you have will decide which covers or liabilities you should opt for. The bodily injury liability and the property damage liability costs $40 each every year but this amount will depend on the limit you have chosen. Collision cover and comprehensive cover usually cost a few dollars each every year.
If you are choosing a higher limit then you may have to pay a higher premium but you will be worry free in case an accident occurs. While buying auto insurance you should keep in mind that choosing a higher limit on liabilities will prevent you front paying large sums of money in case there is an accident and depending on the liability you choose, you may even be covered for legal expenses. Bodily injury liability and property damage liability pay for the applicant’s legal expenses in case the other person in the accident decides to sue.
Deductibility
If you do not want to pay a high premium then you should consider increasing your deductibility. The standard ratio for deductibility is 80/20 which means that you pay only 20% of the amount when an accident occurs but by increasing out of pocket deductibility you can reduce your premium. You should keep in mind that after increasing the deductibility you will be liable to pay that percentage out of your pocket when an accident occurs so you should increase the deductibility only if you have spare money.
