There’s a lot of advice going around about car insurance coverage. If you are asking yourself, “How much car insurance do I need?” here are some perspectives you might not have considered. This advice could save you from disaster.
Just Go With The Minimum? Not So Fast
You might be tempted to buy the minimum amount of insurance as allowed by law. Some states don’t even require car insurance. However, this might be asking for big trouble. According to Pat Goss of Goss’ Garage, even minor fender benders can turn into huge lawsuits.
For example, let’s say you rear-end a car at 5-10 mph. There might be minor dent damage to the other car, but the next thing you know the person you bumped into complains of whiplash. Their medical bills – including costly rehab – begins to soar into the tens of thousands of dollars. Even if you are carrying $50,000 in liability insurance, this can get eaten up quickly in awards for plaintiffs complaining of pain and suffering.
Double Down On Liability
Pat Goss personally carries double the recommended liability insurance. Being an industry expert, he has seen firsthand how lawsuits can land people in bankruptcy court. If a jury finds you liable, you have to pay. If you have adequate car insurance, then you are covered. It pays to have good coverage here, but there are other ways you can cut your monthly payment down.
Smart Methods To Reduce Costs
You might have heard that increasing your deductible can save on insurance costs, and this is true. The deductible is the amount you agree to pay – out-of-pocket – for any claim before the insurance payment kicks in. if you carry a high deductible, then your monthly insurance premium is lower.
Goss likes this idea, but he still recommends being prepared. He sets aside the deductible money in an interest bearing savings account that he never touches unless he must make an insurance claim. That way Goss knows he can pay the deductible, and he makes a bit of money from interest while he’s at it. That’s smart auto insurance management.
Pat advises that you read the insurance policy thoroughly. Car insurance needs might change depending on where you live or your type of driving. Consider these scenarios and decide if you need to be covered:
- Car break in or theft
- Accident with another car or non-moving object
- Hitting an animal while driving
- Accident with another driver that has no insurance
Think about the possibilities involved with each situation. Decide for yourself if it’s worth running the risk of not having the right coverage.
Use Your Head
Not only do most states require it, but car insurance could save you from an economic disaster. Make sure the level of coverage you choose meets your needs and comfort level.
Published in CARCHEX Auto Insurance Resources by CARCHEX on November 11, 2014