We hear it all the time – How do I know what types and how much car insurance to buy? With so many options to choose from, selecting the coverage for your policy could be confusing. In this article, we are taking a much closer look at car insurance and the importance of having the right types of coverage and ample limits.
Compensation for Personal Vehicle Damages or Loss
How much did your vehicle cost you? What will it be worth when you are ready to sell it or trade it in? Whether you financed your car, leased it, or own it outright, chances are you have a lot of money wrapped in your vehicle. Repairing or replacing it could cost thousands of dollars out of your own pocket if you do not have adequate coverage. Whatever the value of your vehicle, two types of insurance coverage – collision and comprehensive – can help protect you against accident and non-accident related losses.
Collision coverage helps compensate you for damages to your vehicle that occur as the result of an accident. That includes multiple-car accidents, as well as single-car accidents involving only your vehicle. If you hit a tree, for example, your collision coverage will pay for repairs to your car.
Comprehensive coverage may sound like all-inclusive coverage for your vehicle, but it is independent of your collision protection. Though comprehensive protection still covers physical damages to your vehicle for the same amounts that collision does, it is designed specifically for non-accident related damages, such as those caused by vandalism, theft, or a weather-related event, such as hail damage.
Collision or Comprehensive? You Need Both
Owning or leasing a vehicle comes with risks. You need both collision and comprehensive coverage to minimize your vulnerability to a potential loss. If you lease or finance your vehicle, chances are your lender will require you to carry both types of coverage to protect their financial interest in the vehicle. If you own the title to your vehicle, collision and comprehensive insurance can still assure you do not find yourself without transportation in the event of an accident or loss.
There are no coverage amounts to select for your collision and comprehensive insurance. If your vehicle is damaged beyond repair, your insurance company will simply compensate you for the loss of your car based on its actual cash value. However, some insurance companies will make exceptions for collector or antique vehicles. In those cases, the vehicle may be insured for an agreed value instead.
The only decision you need to make regarding your collision and comprehensive coverage is the amount of your deductible, which could range between as little as $100 to as much as $1,000 or more. Higher deductibles typically result in lower premiums, and vice versa. Just be sure to select an amount you could easily afford to pay out of pocket toward the cost of your claims in the event of a loss.
Money to Pay for Damages to Other People’s Property
If you are responsible for causing a car accident, you could also be financially liable for repairing or replacing any property you damage. Whether it is a $80,000 luxury vehicle or damage to a storefront you ran into, property damage liability can cost tens of thousands of dollars – or more. Wisconsin requires drivers to carry a minimum amount of property damage liability coverage, but it is hardly enough to cover the cost of damages in a major accident.
Even though the victim’s insurance company may initially pay for the cost of damages, you can be sure the insurer will sue you to recover compensation for those damages. Choosing adequate property damage liability limits is an important part of protecting your financial future and shielding your family against a damaging loss. Here at G&L Insurance, we can help you determine exactly how much property damage liability protection you need to protect your assets, savings, and future income against lawsuits.
Continue reading part two of “How much car insurance is enough?”