How Much Auto Insurance Coverage Do You Really Need?

Insurance Blog

In today's driving environment, auto insurance coverage is an absolute necessity. Unfortunately, many drivers have little to no idea of how much coverage they actually need. The following provides an in-depth explanation of your liability and supplemental coverage options.

Liability Coverage

Every auto insurance policy offers liability coverage as a given. However, the minimum coverage required usually varies depending on your state. For example, drivers in Georgia are required to carry at least $25,000 in bodily injury liability coverage for a single driver, $50,000 in bodily injury liability coverage for all passengers and $25,000 in property damage liability coverage.

Limiting your liability coverage to the state-required minimum can help save you money on your annual premiums. However, it won't afford you as much protection as you'd get if you had decided on higher liability limits. Ideally, your coverage amounts should be equal to the total amount of your assets. Opting for higher coverage amounts keeps you from having to liquidate your assets just to cover an unfavorable settlement after an accident.

Supplemental Coverage Options

In addition to regular liability coverage, you may find yourself needing supplemental coverage to cover the costs of repairing or replacing your own vehicle:

• You'll need collision coverage if you own or lease a newer vehicle and want your insurance provider to repair or replace it after an accident.
• You'll also need comprehensive coverage if you want your provider to repair or replace your vehicle if it's vandalized, stolen or otherwise damaged. Many providers also require comprehensive coverage if you want to benefit from roadside assistance or car rental reimbursement.
• Gap insurance coverage is a must-have if you currently lease or finance a vehicle and want to bridge the gap between how much it's actually worth and how much you'll owe on it after an accident.

If you own an older vehicle with a relatively low resale value, then you may not need any of these coverage options. Otherwise, supplemental coverage could prove to be a wise investment.

Higher Deductibles vs. Lower Premiums

Most supplemental coverage options require you to pay a certain amount towards the cost of repairs before your auto insurance provider steps in and covers the rest. The overall cost of your supplemental auto insurance coverage can depend on the size of your deductible:

A high deductible means that you won't spend as much money on your annual premiums, but you could wind up spending hundreds of dollars up front in the event of an accident. A low deductible means won't have to contribute so much of your own money upfront, but the potential savings are offset by higher annual premiums.

Figuring out how much auto insurance you need could be a confusing and sometimes frustrating process. It's usually good idea to sit down with your auto insurance agent and create a unique plan that covers all of the bases without costing you a fortune. For additional information about auto insurance, contact a carrier such as Consumers Coverage Corporation. 

16 December 2015