What is good insurance coverage for a car?
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UPDATED: Mar 19, 2020
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- Always verify what your state’s minimum requirements are for insurance coverage.
- There may be times that the required state minimum meets your insurance coverage needs.
- Good coverage for a vehicle depends on the vehicle’s year, make, model, mileage, current condition and other factors.
- Remember that insurance providers cover your car for the value it currently has, not the price you originally paid.
- Choose collision and comprehensive coverage with higher deductibles, and plan on paying smaller repair costs out of pocket.
Insurance coverage for a car is a combination of different policies that provide protection for you and your vehicle when involved in different types of accidents.
Although not every portion of the insurance policy will apply directly to your vehicle, many of the coverage limits carried are important in case you cause property damage or bodily injury to another party.
If you have questions about the coverage types and what they cover, any insurance agent or broker you speak with while you shop for insurance coverage can provide additional context.
State Required Minimums
Every state has different insurance requirements, which can be a determining factor in what types of insurance coverage you will shop for.
In Michigan, for example, no-fault insurance coverage is a requirement. This type of coverage pays out regardless of the determination of fault in the accident.
In Illinois, however, no-fault insurance is not a required type of coverage. If you live in a state that requires this coverage, make sure to compare prices from multiple providers; this coverage tends to be more expensive than some other policy types.
No matter which state you live in, you are legally required to be financially responsible if you are involved in an accident. This is required because you could potentially injure another party or cause property damage during the course of the accident.
If you have questions about the legally required minimums, consult with a local insurance agent, broker or the Department of Insurance for your state.
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Take Your Car Into Account
Every vehicle will need different levels of coverage based on a number of factors.
For instance, if your car is only a year old and you currently have a car payment, your state or financial institution may require that you carry property damage and bodily injury liability coverage, comprehensive coverage and collision coverage.
However, if your car is 20 years old, has no payment and is only worth a couple thousand dollars, then it may make more sense to remove coverage like comprehensive or collision.
In the event of an accident, it may just be more cost effective to replace the car as opposed to repairing it, as coverage like collision coverage carries a deductible that you are required to pay before the insurance company starts to cover any of the cost.
Remember, insurance providers pay out based on the current value your car has, not necessarily what you paid for it.
As mentioned before, having coverage like comprehensive or collision coverage can help you replace or repair your car after an accident, but you will have a deductible to pay before coverage goes into effect.
Take you car’s current value into account when determining if collision and comprehensive coverage are right for your car.
When shopping around for car insurance coverage, factors like your car’s age, make, model, condition, and mileage will all impact what is considered “good” coverage.
Coverage that is appropriate for a brand new car immediately after it comes off the lot may not be what would be appropriate for a 20-year-old, used car. Additionally, the laws of your state may potentially determine what kind of coverage you are required to buy.
The Primary Drivers of the Car
Good insurance coverage can vary based on the state required minimums, your car’s specific condition and the age or number of primary drivers of the car.
If you are shopping for coverage for a teenage driver, then you may want to consider higher coverage amounts, as teenage drivers are still learning and may be more likely to have an accident.
The number of drivers on a policy may warrant higher coverage amounts as well since the car may be on the road more often than if there were only one driver. This results in your car having an increased exposure to potential accidents.
Shopping for Car Insurance Coverage
When shopping for good insurance coverage, make sure to consider your specific needs and the state minimum requirements. Your car’s age, make, model, mileage, and condition are all going to be factors that determine what coverage you need.
Additionally, the number of drivers, or the age of those drivers, may influence how much coverage you need to buy in order to provide adequate protection in an accident.
Make sure to go over the complete picture with any insurance agent, broker or provider you get a quote from, and they can help you work out what your insurance needs truly are.