The question is – How much auto insurance coverage should I buy?
Well, the generic answer is: Buy as much as you can afford. But that’s not really helpful. That’s like a stockbroker telling you to buy low, sell high. Really, Auto Insurance coverage is a bundle of several different types of insurance. What you need to determine is – What are your needs?
Types of Auto Insurance Coverage
Well, we learned that BI (Bodily Injury) Auto Insurance covers the liability if you hit somebody else – what you would pay to them and how much insurance you have, to cover you for that loss. We’ve learned that UM (Uninsured Motors) covers injury that will be paid to you if you were hit by someone who doesn’t have enough auto insurance coverage. That means that they are Uninsured or Under-Insured. We also learned about PIP (Personal Injury Protection). That means, insurance you purchased to cover your medical payments.
State Limitations And Auto Insurance Coverage
The first thing you should do is determine – What are the limits which are required by your state? Each state has certain minimum requirements that you must have. Certain states require you to have PIP (Personal Injury Protection). That means you are required, to be a driver in that state, to hold that type of insurance. Others require you to have a certain minimum level of BI.
Not Just the Minimum Requirement
Now, when you purchase auto insurance coverage, you need to look past the minimums. Determine what assets you have. What are your needs? What medical insurance do you have and what might be your needs in the future?
Auto Insurance Coverage Considerations
Usually, you want to look at the following criteria:
1. The more assets you have, the more BI (Bodily insurance) you should purchase. If you have a state which has a lot of uninsured or under-insured motorists, you want to purchase UM. Remember that UM, under-insurance or uninsured motorists, protects you if you are hit by another driver and they don’t have enough auto insurance coverage.
2. Another thing you want to look at is your PIP. Most PIP (Personal Injury Protection) will pay 80% of the first $10,000. Many PIP Policies also offer deductibles. That means you’ve got to pay the first $2,000 out of pocket of your medical expenses.
3. Look at your PIP policy. You might want to augment that with some Med Pay or additional PIP coverage’s.
4. Also, on your UM. Since you are covering your person, get it to the highest levels that you can afford.
5. Other types of auto insurance coverage you might want to look at are your collision. What do you want to pay if your car is damaged or other personal property – that means the vehicle is damaged? If you’ve got a car that’s not worth a lot, you might want to consider waiving or not insuring your car for collision.
All of these decisions are personal and they cannot be made across the board. Sit down with your agent and discuss your personal needs. Remember, the most important thing you are to ensure is your person and your family. Therefore, focus on: UM, PIP, and Med Pay. Those are the types of things your agent will tell you which will cover you and your family if they are involved in an accident and are injured.
