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Car Insurance

Most states require you to have car insurance. But they don’t require you to have much. In states that have so-called mandatory car insurance laws, all you are required to buy is a little bit of liability coverage. This is so you can pay for some of the damage your car does to other cars and other people who are not in your car.How much are you required to buy? In many states with mandatory car insurance laws, the minimum needed is liability that provides 1) $15,000 for any person involved in an accident with you, 2) a maximum of $30,000 for all persons in the accident, and 3) $5,000 for damage to the other vehicle(s) involved. That’s not much. In fact, it’s next to nothing.* Tip. The minimum amount of insurance required by most states is not much. Seriously consider getting more coverage in order to protect your financial health.* Note. Notice that mandatory car insurance laws do not require you to buy coverage for your own car. Or coverage for your injuries. Or coverage if you are hit by someone who doesn’t have insurance.If you buy just the minimum coverage required by law, you are leaving your assets at considerable risk. Your car, obviously. And your home, if you are at fault in an accident that causes serious injuries to the other parties.How far do you think $5,000 will go if you total somebody’s Lexus? Not far enough!

Little Known Fact: There Are Six Distinct Coverages in an car Policy

car insurance is a product with six distinct coverages.Let’s look at them here:
  1. Bodily Injury Liability – This pays the medical and other expenses of those people injured or even killed in accidents you cause. This is required by most states, usually with a minimum coverage of $15,000 for any person involved in an accident with you and no more than $30,000 for all the persons in the accident.
  2. Property Damage Liability – This covers the damage your car causes to property. Usually, that’s the other car or cars involved in the accident, but it also covers damage you do to any object you hit; garages, buildings, lampposts, fences, whatever. This is also required in most states, usually with a minimum coverage of $5,000.
  3. Collision – This is for damage done to your car when it collides with other vehicles (your fault) or other objects (again, your fault).
  4. Comprehensive – This covers damage to your car resulting from something other than a collision with another vehicle. For example, damage caused by vandals or a wind-blown tree hitting your car. It also includes coverage for theft.
  5. Medical Payments – This pays medical, and even funeral, expenses for you as well as members of your family and passengers in your car if it is involved in a collision, regardless of who caused the accident. It also covers you as a pedestrian if a vehicle hits you.
  6. Uninsured/Underinsured Motorist – This pays for injuries to you and, in some policies, damage to your car if you are hit by a driver who doesn’t have insurance – or by someone who doesn’t have enough insurance to cover your losses. In most states, more than 10% of motorists don’t have any insurance. In some states, as many as three out of 10 drivers don’t have coverage.

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