1. Liability Insurance Of all of the types of auto insurance available to drivers today, this is the most important. In fact, several states mandate that drivers cover this insurance, at a minimum. However, the required policies are generally much too little to actually protect a driver should he or she be found negligent in an accident. Consider the fact that a minimum policy may provide only $5000 in vehicle repair coverage. If the negligent party caused an accident that resulted in a newer vehicle being totaled, the damage totals could reach upwards of $40-$50 thousand dollars. It is easy to see how one can quickly become financially strapped, especially if forced to go to court. In order to better understand the level of liability insurance that should be purchased, one must first know of the two types of liability insurance:
Bodily Injury Liability: Minimum requirements for this type of coverage are generally listed at the lesser of $15,000 per person or $30,000 per accident. That is to say that the insurance company will cover this much of the medical expenses related to the accident. It is highly recommended that drivers consider more realistic policies providing the lesser of $100,000 per person or $300,000 per accident.
Property Damage Liability: Will cover the damage done to vehicles in an accident. As mentioned above, the minimum required is typically $5,000 per accident, but experts recommend a policy for $50,000-$75,000 per accident.
2. Collision Insurance will cover the damages done to your vehicle when it has collided with another car or stationary object. It is not generally required that a driver carry collision insurance, but a personal injury lawyer will highly recommend it. A car that is totaled in an accident can represent a loss of $2000-$70,000 dollars depending on the value of the vehicle. That is a lot to lose as compared to the relatively small expense of an insurance policy. In addition to coverage levels, one should consider the amount of deductible that can be afforded after an accident. Deductibles can range from $100-$1,000.
3. Comprehensive Insurance protects the driver should the car be damaged by something other than a crash. For instance, hitting a deer, getting stuck in a hail storm, or having a tree topple over on the car are all unexpected expenses mitigated by insurance. Again, this is not typically required, but is highly recommended.
4. Medical Payments This is insurance that covers medical expenses not covered by health insurance. It is not mandatory, but it can protect the driver and his or her passengers in the event of an accident.
5. Uninsured/Underinsured Motorist Insurance This is probably the most valued insurance. There are a large number of drivers operating vehicles with very little or no insurance. When that uninsured or underinsured individual causes an accident, there is nothing there to protect the victims, especially if the negligent party has little or nothing in the way of assets. For this reason, insurance companies now offer protection, so when the negligent party cannot cover the expenses, the victim’s insurance picks up the tab.