You rely on your car insurance to give you peace of mind knowing that your vehicle, income, and assets are protected against unexpected accidents and other covered events. You know there are many types of coverage to choose from, as well as limits and deductibles, but how do you know if your policy is a good fit for your needs? How much car insurance do you really need?
Here at Integrity Insurance Agency, we know the answers to those questions are different for everyone depending on an assortment of individual factors. However, one thing is true for all drivers: Having the right coverage and limits is essential for protecting your financial future. In this article, we will explore the various types of car insurance available and reasons you need adequate coverage.
Physical Damage Coverage for Your Car
A car accident could inflict serious damage on your vehicle. In 2013, the average cost to repair a vehicle damaged in a collision was approximately $3,200. Of course, accidents are not the only way your vehicle could become damaged. Theft, vandalism, and weather-related damages are just a few examples of vehicle-related losses. How much would it cost you to repair your personal vehicle? Could you afford to completely replace your car if it is damaged beyond repair?
Fortunately, insurance for physical damages to your personal vehicle is available in the form of two types of coverage – collision and comprehensive. Together, these two types of coverage form a powerhouse of protection against damages to your car. The first – collision – takes care of damages caused by collisions, whether they involve multiple vehicles or only your car. The other – comprehensive – covers damages from incidents other than collisions, such as fire, theft, and hail damage.
Collision and comprehensive insurance can save you thousands of dollars on the cost of repairs and far more if your vehicle is declared a total loss. In that scenario, your insurance company would reimburse you for your loss based on the actual cash value of your car; although an exception may apply to antique or collector’s vehicles, which are often insured based on an agreed value.
Should Your Vehicle be Covered?
There are no laws requiring you to have insurance that protects your vehicle against physical damages, but that does not mean you should forego this important protection. Not only could it save you thousands of dollars if you need to file a claim, but it can also protect the investment you have made in your vehicle. Furthermore, some lenders require collision and comprehensive coverage to protect their financial interest in a car. If you financed or leased your vehicle, you may need coverage for your vehicle to satisfy the terms of your agreement.
Though you do not have to select coverage amounts or limits for your collision and comprehensive insurance, you will have to select a deductible. This is the cash amount you will pay toward the cost of any physical damages claims in the future. Depending on your insurer, you may be able to select a deductible of as little as $100 or as much as $1,000. While paying less for a smaller deductible may seem ideal after an accident, choosing a higher deductible may translate to lower insurance premiums. Talk to one of our team members for help choosing a deductible that is right for you.
Coverage for Property Damage Liability
Your car might not be the only one damaged in an accident. If you damage another vehicle, you could be responsible for thousands of dollars in repairs. If you total the vehicle, it could cost you much more. But what if you cause even more extensive damage than that? What if you hit a brand new Leuxs, or run into someone’s home? The damages could quickly go from thousands to tens of thousand, and perhaps even more.
Here in Kansas, drivers are responsible for damages they cause to other people’s property. State law requires that you carry a minimum amount of coverage, but it may not be enough to cover your total liability. Ultimately, you could get stuck with a bill for any damages that exceed the limits on your property damage liability coverage.
For example, imagine a driver that damages a storefront, causing $80,000 in damages. The business owner’s insurance pays for the initial damages but then pursues the driver for compensation. The driver only has $50,000 in coverage (more than the minimum required by law) and is forced to pay an additional $30,000 out of pocket by dipping into savings and making payments from future income.
Here at Integrity Insurance Agency, we recommend that drivers get a professional liability risk evaluation from a trusted independent agent in our office.
Continue reading part two of “How much car insurance is enough?”