How Much Car Insurance Do You Need?

Car insurance is an agreement between you and your insurance company. It states that you will be covered against financial loss if you are involved in a traffic incident that causes physical damage or bodily injury to other parties.

Car insurance provides coverage for the following:

  • Your insurance provider will pay for damage to your car resulting from a collision and cover your losses if your vehicle is stolen.
  • Your insurance will cover the costs associated with bodily injury or property damage in the event of a vehicular accident. In most cases, the insurance company will cover all or part of the expenses associated with the claim.
  • This covers you for the cost of rehabilitation or treatment of injuries arising from a traffic incident. Your provider will cover these expenses along with lost wages and funeral expenses, if applicable.

Why do you need car insurance?

It’s a good idea to obtain a Santa Fe car insurance policy as soon as you get your vehicle before even taking it out for a first drive. Getting caught driving a car without insurance will almost certainly result in criminal and financial penalties, including the suspension of your license and registration.

Getting into an accident without the minimum car insurance could also entail considerable expense. Furthermore, you will have to pay out-of-pocket to cover the costs of property damage and medical bills. If you aren’t able to do so, you risk having your bank accounts frozen and your assets seized.

Determining how much car insurance you need

How much car insurance do you actually need? There are a few factors to consider when determining how much car insurance is necessary. Some of the most important of these are:

Minimum coverage requirements per state

You need to find out your state’s requirements concerning the type and amount of coverage you need. Before you do so, it would help to be familiar with how liability coverage is usually represented.

Liability coverage is commonly represented as three values, each of which is separated by a slash–for example, 30/60/25.

Multiplying the first number by 1,000 gives you the maximum amount that an insurance company will pay for an individual’s injuries. Multiplying the second number by 1,000 determines the amount of coverage for all the injured parties. Finally, multiplying the third number gives you the amount of coverage for property damage resulting from the incident.

Think about the cost

When shopping for car insurance, the cost of the policy is a primary concern. To determine how much money you should spend on car insurance, consider the cost of collision and comprehensive coverage.

Collision coverage isn’t usually required by law. However, this type of coverage may be a requirement when leasing or financing a car.

Collision coverage provides financial assistance if you get involved in a traffic accident. It will pay for damage done to your vehicle.

Comprehensive coverage offers protection from other types of damage apart from those caused by traffic accidents. This includes damage resulting from vandalism, theft, flood, hail, and fire.

Calculate the cost of collision and comprehensive coverage and compare it with the cash value of your car. If the cost is greater than 10% of your car’s worth (not including your deductible), consider skipping collision and comprehensive coverage altogether.

Make sure your coverage offsets your assets

Finally, figure out how much liability coverage is necessary to offset the total value of your net worth. Remember that if your insurance policy isn’t enough to cover the damages resulting from a traffic accident, you will be responsible for the remaining balance. If you cannot pay the additional costs, you risk having your personal assets seized or funds deducted from your wages.

If you don’t own a house or have any savings, you do not necessarily have to get a policy that covers the value of your assets. If your car is your only asset and it is fully paid, you could purchase a policy that will cover only your car’s cost. Doing so saves you the cost of insurance that you won’t need.

Talk to an auto insurance expert

The steps outlined above should give you a good foundation for further research. It is advisable to consult with an insurance professional to determine the type and scope of car insurance you need. Seeking an experienced industry professional’s advice will help you choose the most appropriate insurance plan according to your circumstances.

About Daniels Insurance, Inc.

At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.