AUTO INSURANCE ARTICLE
When is Enough, Enough for Auto Insurance?
By: AutoInsuranceGuyAuto insurance is a policy that all drivers and car owners must have. But the key question that you may have in mind is how much auto insurance should you buy? The rule of thumb is to buy one which you can afford given the coverage you want. But while this sounds much like a wise advice, it still is within the grey area in terms of actual decision-making is concerned.
There are a few key points which you may consider as you decide how much auto insurance you will sign-up with.
Know your state limits. What does your state, where you live, require as minimum coverage? Some states may require more than that of the area where you live? Or your minimum coverage may cover more than what your friends pay in neighbouring states.
Know what your limit covers and go beyond the jargons. You have to know what is the extent of your auto insurance coverage. It would be better if you know the basic terms that are part and parcel of your policy. A few of which are the following:
Bodily Injury Liability - this covers medical expenses for injuries or death the policyholder causes to a third party. This coverage is commonly referred to as "BI" and is usually written together with Property Damage Liability.
Claim - the policyholder's request for the reimbursement of a loss covered by their insurance policy.
Collision: this coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by a collision with another vehicle or object, such as signages.
Comprehensive - for damage to the policyholder's car that doesn't involve hitting another car. Covers damage resulting from fire, theft, falling objects, missiles, explosion, earthquake, flood, riot and civil commotion.
Weigh add-ons against your need and capacity. It is not uncommon for standard auto insurance policies to include coverage that are beyond the minimum required by your state legislation. The question to ask then to yourself is, “Do I need it?” and “Can I afford it?”.
Determine which assets you are protecting. If you cause injury or damage is it your car itself that is at stake? If yes, you will need comprehensive and collision coverage. If it is not your car that needs protection but your net worth, either take it out of your name and put it into a trust or buy all the insurance you can. On the other hand if your car or your net worth is not much of a significant issue for you, then insurance with less coverage may be sufficient for you.
Compare the next level of protection. Sometimes the interval between your current coverage and the next higher one only costs a matter of pennies, but rewards double protection. Inquire if the additional cost to a better coverage is something you can invest on, at the moment.
So when is enough, enough? It’s a fine balancing between what you can afford vis-ŕ-vis what protection is provided, and in compliance with what your state requires.