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Coverage Protect Your Assets

When you buy auto insurance, you are inundated with choices. First, you have to decide which company to buy from. There are dozens of companies competing for your business. Then, you have to decide which coverage you want to purchase and how much of it you want to buy.

Some people keep it simple and just buy the minimum required in their state. But usually that amount of coverage is grossly inadequate to protect the person, vehicle, and other drivers and passengers. wants to simplify the process and help you gain a better understanding of coverage and determine how much car insurance you need. Below is our explanation of some of the typical types of coverage available in an auto insurance policy.

BI/PD Liability

The minimum amount of bodily injury (BI) liability coverage that you need will vary from state to state. The general rule of some is that your BI liability should cover the total value of all of your assets. This is because more assets mean a greater potential loss, so you need to make sure that they are protected.

Again, state laws will dictate the minimum amount of property damage (PD) liability that you must carry. In most cases, it is recommended that you have a minimum of $50,000 worth of coverage because that will cover the costs of most vehicles. This coverage is designed to pay for the other party’s vehicle in the event that you are responsible for the accident.

Personal Injury Protection

Personal injury protection (PIP) pays for expenses related to the accident regardless of whose fault it is. Some people believe that their health and disability insurance will be able to provide them with enough coverage that PIP is not needed. Others believe that a small amount of PIP can act as a stopgap between your expenses and meeting your health insurance deductible, as PIP does not normally have a deductible.

PIP is an important form of coverage that in some states is required by law. Additionally, it covers some expenses not covered by health insurance, such as lost wages and expenses arising from an injury such as the need for lawn care or house cleaning services.

UM/UIM Coverage

Most people argue that because of the high rate of uninsured motorists in the country, Uninsured Motorist (UM) Coverage should be considered essential. It is a relatively inexpensive addition to your policy and on average will cost less than $40 a year for $100,000 worth of coverage. Along with protecting you from uninsured motorists, it will also normally protect you from a hit-and-run driver as well.

Underinsured Motorist Coverage (UIM) comes into play when the person at fault in an accident does not have enough insurance to cover all the damages involved in the collision. With the cost today of medical expenses and vehicle repairs, this coverage makes a lot of sense. UIM is combined with UM in many states but in some states it is a separate form of coverage.

Collision/Comprehensive Coverage

Collision and comprehensive coverage will normally account for 30% to 40% of your auto insurance rates. The general rule of thumb is that your collision and comprehensive coverage should not be more than 10% of your vehicles Kelley Blue Book value. Additionally, while this coverage is optional in most states, if you do not have it and get in an accident, you will be responsible for all of your repairs.

Any Valuable Extras?

If there is one type of additional coverage that tends to be well worth the investment, it is full glass coverage. Replacing glass in your car can easily range upwards to $500, even if it is just a chip or crack. On the other hand, this coverage will normally be very inexpensive.

In fact some policies are now including it automatically because it is such a nominal fee. There are a variety of different types of umbrella policies that may be added to you auto policy. Check with your company for the available coverage options so you can get a more complete picture and determine what car insurance you need.

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