If you drive a vehicle regularly, auto insurance is just another part of life, period. Required by law in 48—or 49—of 50 U.S. states depending on how you slice it (New Hampshire drivers must prove they’re financially able to cover an at-fault accident while Virginia requires uninsured motorists to pay a hefty fee to register their vehicle), insurance is something no one can get out of, unless they’re willing to be sued or experience jail time.
Auto Insurance: What Gives?
Auto insurance laws are set at the state level, and as such, what passes for the legal amount of coverage in one state might not be enough in another, just look at the discrepancies between Oklahoma and Oregon.
This leads many people to ask, “how much car insurance do I really need, then?” First off, you need to have the amount of car insurance as required by law in your state. The majority of states require liability, bodily injury and property liability insurance. If you’re involved in an accident in which you’re found to be at fault, your liability insurance financially covers the damages sustained to the other vehicle and the injuries sustained to the other driver and any of their passengers. Liability insurance does not cover your vehicle or personal injuries.
It’s because of this that many motorists opt to get extra coverage, including collision and comprehensive coverage. Some drivers even go so far as investing in PIP insurance and uninsured/underinsured motorist protection coverage. There are states that require their motorists to carry all of the above. Once you’ve determined the auto insurance laws in your state, it’s time to examine what elective insurance (if any) you really need.
Ask Questions, Do Your Research
Before signing on for overly expensive or unnecessary insurance coverage, know what you’re looking for. This will again depend on your state’s insurance laws and the maintenance shape of your car. As you’re probably already aware, a vehicle’s worth depreciates as soon as it’s driven off the sales lot. If your car is over 10 years old and has a high mileage count, there’s a good possibility that it is worth less than what it would cost to repair after an auto accident. If after an accident it’s determined that your car isn’t worth the repairs, the vehicle will be totaled and you will receive a lump sum of cash that is far less than what you paid for the vehicle. Think about it: if you paid $10,000 for your car and the insurance company has decided that the vehicle was only worth $3,000, that’s all you’ll get back. Any transmission or engine rebuilds that went into the car will be ignored.
That’s why before you get auto insurance, you need to know what your car is actually worth, and you can do it with this car depreciation calculator. If your car is worth five grand or less, and you have the money in the bank to purchase another used vehicle should your current car go out of commission, having the extra collision and comprehensive coverage (if it’s not required by state mandate) is unnecessary. Why pay for extra protection if it’s not going to serve you in any way, shape or form?
This is when it’s smart to search for auto insurance packages online to see what’s offered and at what price. Comparison sites like CoverHound for example ask for only a few simple details about yourself and your car before they generate a host of policies that fit your budget, your needs and your state’s insurance laws.
Here are questions to ask yourself before you sign up for a new auto insurance plan:
-What are my state’s auto insurance carrying laws?
-What is my vehicle worth?
-What type of discounts are available?
-What variables is the premium cost dependent on?
Once you have your answers, you’ll be able to find a plan that meets you and your state’s needs.