It is a common demeanor for car owners to throw around the statement “I’m fully covered” without giving it much of a thought. Interestingly, if you consider this statement from an informed person’s standpoint, it turns out to be a rather meaningless declaration.
Is “fully covered” supposed to mean comprehensive coverage? Perhaps. But you’ll be surprised to find that the majority of car owners who make this claim do not actually have comprehensive coverage – far from it.
Photo by Kyle Sterk on Unsplash
No one wants to be left to shoulder the burden of liability on their own in the event of a car accident, but that might just be the fate you risk facing if you do not have the right coverage.
So, what exactly makes the right coverage for your car? Here are a few pointers that will help:
- Compliance with your state’s minimum insurance requirements. Each state will have a minimum amount of coverage that you are required to observe. Beside this being a legal requirement, chances are that it won’t be much different than what you personally need.
- Being covered for an amount that is equal to the total value of your assets. The ideal cover is one that can compensate for loss of your assets in the event of an insured claim so that your situation is restored.
- Collision coverage with a high deductible, which keeps your premiums low.
Of course, many states prescribe that you have some form of insurance. But the authorities won’t choose what’s best for you. That part remains fully upon you to work out. Your auto insurance is a collection of different policies. These policies cover you in different ways.
Liability coverage
These are policies that cover liability and expenses that you incur when your car is involved in an accident and you are at fault. This money goes only to the people you hit or cause harm to.
Bodily Injury Liability, BIL
This policy helps pay for the medical or other accident-related expenses that other parties have endured as a result of an accident in which you’re at fault. The policy may cover lost wages and compensate for the pain and suffering the other party endures, in addition to paying their medical fees. Depending on the level of coverage of your BIL, this coverage can also help with paying your legal fees in case the other party decides to pursue a legal suit for further damages.
Property Damage Liability
This is a policy that provides coverage for expenses laid against you if you are at fault in an accident that causes damages to another vehicle or property.
Collision coverage
This is the policy that covers repairs to your car after being involved in an accident. This is an optional coverage that insurers like Carchex offer.
Comprehensive coverage
This policy covers costs arising if your car is damaged outside of an accident or is stolen. It will help pay for repairs in the event of a fire, theft, natural disaster, damage from falling objects and more.
To be properly covered, there are a number of high vulnerability areas that you’ll want to cover right off the bat. Liability insurance is one such area of auto insurance that you want to go big on. The information in this write-up should help you evaluate your coverage and see if you need any changes.
