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Auto Insurance- How Much Coverage Is Enough?

Auto insurance coverage can seem very complicated. In previous years, people were content with visiting an insurance agent and taking their recommendations to get the right insurance policy. However, since the internet offers such a simple, fast alternative to auto insurance shopping, consumers need to be educated about different types of coverage to ensure that they get the insurance they need.

Auto insurance would be ideal if everyone would purchase full coverage at the highest limits. Unfortunately, this is not attainable for many people. So how much coverage do you truly need to be financially protected in the event of an accident?

That depends on many factors. First of all, you should ALWAYS purchase more coverage than the amounts mandated by state law. Many state laws don’t require enough auto insurance to cover all the expenses you could incur. If you have a loan or lease on a vehicle, you will be required to purchase full coverage insurance. If you own your vehicle outright, the amount of insurance you need will depend on your financial status and the type of car you drive.

If you drive an older car that doesn’t have much value, you might be okay with state minimum coverage. However, that low coverage might not be guaranteed to cover any other vehicles that you may hit. This only includes collision coverage and property damage coverage, and you should have at least $25,000 to $50,000 worth of this type of coverage to be secure.

As for injury coverage, you need to assume the worst possible scenario when determining what limits you should have. If you get cited for an accident where there are four people injured, and the total injury cost is over $50,000, most state minimum laws won’t have you completely covered. Consider limits of at least $100,000 for bodily injury coverage, just so that you’re protected.

By not purchasing enough insurance, you may save a little money, but you will also have to face legal problems, lawsuits, and huge out-of-pocket expenses for what your insurance doesn’t cover. For example, if you cause an accident that results in $100,000 in damages, but you only have $50,000 worth of coverage, that other $50,000 will come out of your pocket. It’s much simpler to purchase higher coverage limits in the first place and pay a little more each month than to have to come up with thousands of dollars after an accident.