How Much Auto Insurance Do You Actually Need?

How much auto insurance do you need when you’re trying to save money?  

Choosing an Auto Insurance policy is always a tough nut to crack. One we don’t have sufficient knowledge and two with so many companies offering so much, it is often a blind wall.  With so many policies like PIP, BIL, GAP, Collision, and comprehensive coverage, learning where the bare minimum will suffice and where it won’t, is not a child’s play. So which policy would actually help you save money? Let’s help you sort your financial lifeAuto Insurance

How can you save money?  

We always intend to save money, but it somehow escapes us. We hear the terms like medical bills, or insurance company, or interest rates -and shyly decide to step out of the conversation. All of it sounds like jargon nobody took the time to explain, and now you don’t know how much should go in your emergency fund, whether you should have a savings account, and when you should start saving for retirement. Student loans are already gobbling up all of your attention, and quite frankly, you’re lost.  

And when we are lost, we don’t know where we should be putting money.  

To be honest, saving money depends significantly on the healthy money habits that we need to start developing. Our future needs are more critical, and our current wants need to take a step back in the priority list. Our saving goals need to be bigger, enough to delay the purchase of the latest TV or a cool smartphone. The dollars from your pocket need to stop going to the current want it’s of your life.   

Insurance is an excellent way to start on the road to smart planning. And while you hear a lot about health insurance and life insurance, you also need to plan your finances more smartly, beginning with your auto insurance.  

Your auto insurance is the collection of the various policies which cover you differently in many ways. It’s the contract you make with an insurance company, according to which the company protects you against the financial losses incurred in cases of accidents and theft.   Saving Money

Let’s break down what all comes under auto insurance:  

Liability coverage – the policies that aim to help you cover liability and expenses in situations where you’re at fault and in an accident. It will not include the people who were in your car. Instead, the money will be received by the people who were hit by you.  

Bodily Injury Liability or BIL – this policy, again, deals with situations where you’re at fault by covering for the medical expenses of the people who got injured in the crash because of you. These policies are often described as a 20/50  or 100/300 policy -the numbers representing the maximum dollar amount paid by the policy tor the injuries of a single person and the maximum for the injuries sustained by the occupants of the other car in entirety. 

For example, a 20/50 policy pays 20,000 dollars maximum for a single person’s injuries, and an amount of 50,000 dollars total for the overall injuries sustained by all the people in the car that you hit.  

Property Damage Liability – This policy covers the damage induced by the other car in an accident where you are at fault. It is sometimes referred to along with BIL, mentioned as a third number. For instance, this policy will cover $ 10,000 for all the damage done to the other car in a 20/50/10 liability package. 

The policies listed below cover you as well as your card in an accident.  

 PIP, or Personal Injury Protection – this policy covers the medical expenses of you and your passengers after an accident. This policy may also cover lost wages if you lose time at work due to the injuries sustained.  

 Uninsured/Underinsured Motorist Coverage will cover the costs if you get hit by somebody who does not have insurance or has minimal coverage.  

Collision – this is a policy that covers the repair for your car after an accident.  

Comprehensive – If your car gets stolen or is damaged outside of an accident, this policy will cover the costs.  

Gap Insurance or Guaranteed Auto Protection – Collision and comprehensive coverage only deal with your car’s market value and not what you had to pay for it. New vehicles tend to depreciate quickly. In case of car theft or it is totaled, chances are you’ll see a ‘gap’ between the insurance coverage and what you owe to the vehicle. Purchasing gap insurance can help you out in the tricky spot where you have to pay that difference. 

Car Accident

How much auto insurance do you need?  

Carrying auto insurance is required from car owners in almost all the states. In most of them, minimum values for various policies are needed. The state can impound your vehicle in case you do not carry insurance.  

But you’ll need more than just minimum coverage. For example, if you get in a severe accident and the medical expenses of an individual are more than $1500, a liability package of 15/30 will not help out much.  

So when the costs exceed the coverage limits, you’re the one in a tight spot. That is mainly why many people choose policies that cover more than just the minimums. People do this predominantly when they have assets that can be seized to pay for medical care and repairs.  

It’s generally considered wise to make sure that you’re covered for an equal amount to that of your assets, like the total addition of your house, car, investments, and savings. 

Find out the minimum insurance requirement in your state. It will possibly be around the same coverage that you need.  

Not a lot of money needs to go on a PIP policy. Having disability insurance and health insurance through your employer will cover you -so you can stick with the required minimum. 

However, you must have adequate coverage when it comes to uninsured and under-insured drivers. It’s not very expensive in most states and will help you cover costs if you’re in a collision with an uninsured driver.  

If you want to repair or replace your car post-accident, having a collision and comprehensive coverage is worth it since they have a deductible and pay based on the present value of your car. 

Decide on the highest affordable deductible, because it will lower your premium significantly. Spending your own five hundred dollars on minor repairs is a cut above spending an extra fifty dollars each month, even when you don’t need repairs. So it’s better to save collision insurance for the repairs that cost thousands instead of hundreds. You must remember that your premium will increase if you choose to submit claims for all the little things.  

Car owners are required to carry no-fault insurance in some states. It’s a type of insurance coverage that pays for medical bills no matter who is at fault, limiting your ability to sue the other driver. States like Florida, Massachusetts, Kansas, Michigan, and New Jersey, among others, require the car owners to carry this policy. Since these policies are expensive, settling for the best deal is vital for you.  

Once you decide on how much car insurance you need, you can start shopping for it. But before that, doing some research is the smart way to go, since your insurance policies will depend on the kind of car you have and your driving record and credit.  

Insurance Planning

Concluding Thoughts: 

While buying insurance, it’s better to ask about all the discounts available. You can get discounts when you have a car with anti-lock breakers, don’t drive it often, etc. Request a list of all the discounts available and check if you qualify for any of them to help you in saving a lot of money. It would be best if you also considered getting glass coverage. It assists you in paying for the repair or replacement of damaged glass or windshield. You must have heard of windshield insurance, windshield repair insurance, and full windshield replacement insurance –all of these refer to glass insurance coverage only. 

Many companies will let you add glass coverage for a meager amount a month. In some states, depending on its car insurance policies, you can include it in your comprehensive coverage. The scope of full auto glass insurance coverage would depend on the state you live in since it differs by state. So now you see a smart auto insurance planning can save you a lot of money in the immediate and long run. So plan wisely and drive safely.

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