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Deciding How Much Insurance Is Optimal For You

American Government Special Collections Reference Desk

Deciding How Much Insurance Is Optimal For You

Nathan Roberson
December 3, 2012


Purchasing auto insurance is not always a simple task. You may have agents or representatives that are willing to help you, but can you always trust that they have your best interests in mind, or are they simply hoping to sell you a policy? Although most Americans pay for car insurance regularly, it is alarmingly common that they may not understand exactly what they are getting. So when you are shopping for cheap auto insurance, how do you know how much to buy, and what kinds to buy? The first step to making these decisions is to understand the types of insurance that are available to you. Your auto insurance policy will most likely be a collection of the following policies.

Liability

This is the most basic type of auto insurance. It ensures that liability and expenses are covered when you are involved in an accident that is your fault. The money from your insurance company will be given to the people you hit, but won't go to the people in your car. It also won't cover repairs to your car as long as you are at fault. If you borrow money for a car from a bank, this type of insurance will not be sufficient. It is required that you are able to fix your car if you are involved in an accident if you owe someone money for your car.

Bodily Injury Liability

This coverage takes care of the medical expenses of those injured in a car accident in which you are at fault. You will set specific coverage amounts with your insurance company to determine how much the company will cover in these situations.

Property Damage Liability

Property damage liability insurance covers the damage done to the other car if you are in an accident that is your fault. Again, your insurance company will set specific coverage amounts when you purchase your policy to determine how much your company will shell out if you are at fault in an accident. With these coverage amounts, it is easy to see how driving safely and defensively is still in your best interest, even when you have adequate insurance.

Personal Injury Protection

This policy will cover the medical expenses for you and your passengers after an accident. If you have to miss time at work, personal injury protection will kick in and help to pay your lost wages. This type of coverage is a huge benefit in the event of a major accident.

Uninsured/Underinsured Motorist

If you are involved in an accident with someone who does not have insurance, or who doesn't have adequate coverage, this policy will kick in to help cover your expenses.

Collision & Comprehensive Coverage

Collision insurance coverage covers repairs to your car after an accident, and comprehensive insurance coverage takes care of your costs if your car is stolen or damaged outside of an accident. A good example of comprehensive coverage is when your windshield is cracked and must be replaced. In this situation, your comprehensive insurance will cover the costs.

Once you better understand what your car insurance policy contains, you are better equipped to make an educated decision about the type of insurance you want and the company you want to purchase your insurance from.

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When you are shopping for cheap auto insurance, how do you know how much to buy, and what kinds to buy? The first step to making these decisions is to understand the types of insurance that are available to you. Find out everything you need to know about auto insurance policies in this article and at http://www.ifaauto.com



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