Personal Lines FAQs &
Tips-Auto Insurance Coverage
How much coverage do I need?
Almost every state requires you to buy a minimum amount of liability
coverage. Chances are that you will need more liability insurance than
the state requires because accidents cost more than the minimum limits.
If you’re found legally responsible for bills that are more than your
insurance covers, you will have to pay the difference out of your own
pocket. These costs could wipe you out!
The Insurance Information Institute (I.I.I.) recommends that you have
$100,000 of bodily injury protection per person and $300,000 per
accident. If your net worth is more than $300,000, consider buying
additional liability insurance. You may also consider purchasing an
umbrella or excess liability policy. These policies pay when your
underlying coverages are exhausted. Typically, these policies cost
between $200 and $300 per year for a million dollars in coverage. If you
have your homeowners and auto insurance with the same company, check out
the cost of coverage with this company first. If you have coverage with
different companies, it may be easier to buy it from your auto insurance
company.
In addition to liability coverage, consider buying collision and
comprehensive coverage. You don't decide how much to buy. Your coverage
reflects the market value of your car and the cost of repairing it.
Decide on a deductible—the amount of money you pay on a claim before the
insurance company reimburses you. Typically, deductibles are $500 or
$1,000; the higher your deductible, the lower your premium.
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What determines
the price of my policy?
There are many factors that influence the
price you pay for auto insurance. The average American driver spends
about $700 a year. Your premium may be higher or lower, depending on:
1. Your driving record.
The better your record, the lower your premium. If you've had accidents
or serious traffic violations, you will pay more than if you have a
clean driving
record. You may also pay more if you haven't been insured for a number
of years.
2. The number of miles you drive each year.
The more miles you drive, the more chance for accidents. If you drive a
lower than average number of miles per year, less than 10,000, you will
pay less. For instance, some companies will give discounts to
policyholders who carpool.
3. Where you live.
Insurance companies look at local trends, such as the number of
accidents, car thefts and lawsuits, as well as the cost of medical care
and car repair.
4. Your age.
In general, mature drivers have fewer accidents than less experienced
drivers, particularly teenagers. So insurers generally charge more if
teenagers or young people below age 25 drive your car.
5. The car you drive.
Some cars cost more to insure than others. Variables include the
likelihood of theft, the cost of the car, the cost of repairs, and the
overall safety record of the car.
6. The amount of coverage.
Of course, like anything else, the more coverage you have, the more you
pay. However, you may qualify for discounts.
Articles courtesy
of © Insurance Information Institute, Inc. - ALL RIGHTS RESERVED -www.iii.org
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