You may think of vehicle insurance as one of those things you just need to buy, making quick decisions based on the “standard” policy that suits most people. However, coverage can be expensive—and damages from an accident can be even more expensive, so it pays to think about what you’re buying, and why.
Accidents happen. We don’t mean them to, they just do. And so you carry insurance on your vehicle, to pay for the repairs and sometimes medical bills that come with accidents. Whether the accident is your fault or someone else’s, you’re a responsible adult, and adulting means having insurance.
But not all insurance is the same. There are varying levels of coverage that protect you in different circumstances. Some insurance covers things other than accidents (and sometimes these things can be covered more cheaply elsewhere). And there are also state minimum coverages you need to keep in mind.
The “auto” in auto insurance doesn’t stand for automatic – you need to consider a lot of factors, and most policies are endlessly customizable. Here are the four most important things to think about.
What are your minimum coverages? There are likely state minimum for Liability and Collision coverage, and if you have an auto loan or lease, you’re likely required to carry certain amounts of Collision coverage.
How much coverage do you need? This requires some significant thought. Do you need towing and rental coverage in your policy? How much liability coverage is the right amount? How important is uninsured motorist coverage?
Do I need to use an insurance agent? The choice of whether to use an agent or not is a personal one, but should be considered. Many agents are very helpful professionals who can help you navigate a complicated subject. Having that kind of person in your corner can definitely be a benefit – but like insurance policies, not all agents are created equal.
What is your insurance company going to do in the case of an accident? Understanding how insurance companies operate, and who has a financial stake when an accident is involved, can help you be a more informed consumer – which in turn results in better choices on your part.
Many states set minimums for auto insurance coverage? Make sure you check with your state’s department of motor vehicles or insurance agent to get enough coverage.