Make Sure You Have Enough, but Not Too Much

When shopping for auto insurance, you may have a few questions. Do you have enough insurance? Should you purchase comprehensive and collision insurance? Are the state minimums enough? If you buy too much insurance, you are just throwing money down the drain. If you don't buy enough auto insurance, you might regret it if you ever get into an accident and have to make a claim. By thinking about your auto insurance needs before you get into an accident, you can ensure that you have the right amount of coverage.

State Minimum Coverage

You know that you have to have the minimum amount of insurance coverage mandated by your state, but is that enough? That depends on your state. Maine requires that you have $50,000 in insurance to cover injuries to one person, or $100,000 for injuries to multiple people in an accident. That might be enough, but if you get into a serious accident, somebody in the other car might have to be airlifted to the hospital, which could end up costing well over the minimum amount of insurance. If you have assets that someone might be vulnerable in a lawsuit, you might want more coverage than that.

Other states, like Louisiana, only require $10,000 in liability protection for injuries to one person, an amount that could easily be surpassed. Other states have very low property damage requirements. New Jersey requires that you insure your vehicle for $5,000 in property damage. Considering that Cash for Clunkers paid $4500 per vehicle, do you think that you might cause more property damage than that if you total a brand new Range Rover? If your state has low minimum liability amounts, you probably want to purchase a little more.

Comprehensive and Collision

If you have a loan on your car, your lender probably wants you to purchase comprehensive and collision insurance. However, if you don't owe any money on your car, it is up to you whether you want to purchase this insurance or not. If your car is fairly new and valuable, or is a classic car, this kind of insurance is probably worth checking out. On the other hand, if your car is on its last legs and is worth less than the deductible, save your money. If you are upside-down on your car loan, you may also want to look into gap insurance. Although many dealers offer this insurance to you when you purchase your car, you can probably save money by purchasing this insurance from an insurance company instead.

Uninsured and Underinsured Motorist Coverage

If you get into an accident with someone who either does not have insurance, or has inadequate insurance, you may end up with more injuries and property damage than what their insurance company will cover. By purchasing uninsured and underinsured motorist coverage, you are protecting yourself against getting into an accident with someone that isn't adequately covered.