1: Other Party:
Auto Insurance Bodily Injury (BI) Liability
and Property Damage (PD) coverage is Legally required in most states
today. (BI & PD) Most people understand that they need BI & PD,
but they have no idea how to determine how much coverage they need.
Try this simple question: What if your car was
involved in an auto accident tonight where heaven forbid, someone else
was injured or killed? Remember, everything you own is in the back seat
of the car with you and is at risk in a lawsuit! So, what do you think
their family would sue you for? $15,000? $25,000? $100,000 or even maybe
a Million dollars! Where would you get the money to pay them?
Perhaps the Equity in your Home would help? How
about your Savings and/or Investments? You could even have up to 25% of
your wages attached to pay the award in most states! Are you prepared to
sacrifice everything you own to pay an award due to this accident? If
not, read on for how to choose the auto insurance coverage you need.
2: You and Your Family:
Now let’s turn the above accident around. For some
unfortunate reason, you or a loved one is the one who is injured or
killed in an auto accident. Where would you get the money if the person
who hit you did not have auto insurance or not enough auto insurance?
Medical bills can be covered if you have health insurance. But health insurance doesn’t cover loss of life, pain & suffering or permanent disability.
Maybe you have a life insurance
policy through your employer or your own individual life policy. Is the
benefit amount sufficient to cover your family if your loved one is
killed? But even if you have life insurance, what pays for the misery,
the pain & suffering, maybe the fact you or a loved one can’t walk
or use their arms again?
You might have a disability insurance policy
through your work if you’re lucky or had good financial advice. But
disability insurance doesn’t pay for loss of life, pain & suffering,
permanent loss of your legs, arm or hand.
The only coverage that pays for these things is a part of an auto
insurance policy known as Un/Under-insured motorist coverage. You can
only buy as much coverage here as you have in Liability coverage. Your
auto insurance agent should be able to help you determine the exact
amount you need.
3: Your Car
Comprehensive and Collision Coverage are the third
part of an auto insurance policy and are sometimes referred to as “Full
coverage.” Basically the difference is this: If you run into the tree
you are covered by Collision coverage. If the tree runs into you
(hypothetically of course), then you are covered by comprehensive
coverage. Comprehensive also covers broken windshields, fire, theft and
vandalism. The higher deductible (risk) you take here, the lower the
premium. Use the savings here to purchase higher limits in the coverages
that protect your assets and your family.
The bottom line to determining proper auto insurance coverage
is, of course, the money available in your household budget. An
excellent place to start in determining the proper auto insurance
coverage for your family is to meet with your local auto insurance
agent.
Most cut-rate companies concern themselves with one
thing only: Price. Tell them what coverage you have and they’ll see if
they can give you the same coverage for less. You become the insurance
professional. If this is the only need you have then that is ok. If not,
you need to seek the advice of a professional to help you determine the
proper amount of coverage you need and how best to accomplish it.
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