What Type of Car Insurance Do I Need?
Car insurance is one of the most important purchases you can make. Driving is necessary for most people, but it’s also very risky. Car repairs and medical bills after an accident can add up to tens of thousands of dollars, so insurance protects you from potential financial ruin.
Picking a plan isn’t an easy decision, though. It’s tough to know how much coverage you need, which plans are worth the cost, and which are a waste of money. To find the cheap car insurance that provides enough coverage, do careful research into your options.
If you’re in the market for an Atlanta car insurance policy, you should understand what types of coverage are available, what the requirements are in your area, and how you should decide on your policy.
Types of Car Insurance
Your car insurance policy can be broken down into different types of coverage. You may choose to purchase just one type, or you may buy a more thorough plan. Here are the most common types of auto insurance coverage:
Collision
Collision insurance covers damage that occurs to your car during a collision with another vehicle or object, such as a tree or a guardrail. It also covers damages from your car overturning.
Collision coverage includes a deductible, which is an amount that you’ll have to pay out-of-pocket before the insurance kicks in. For example, if you have a $500 deductible and the damage to your car totals $1,500, your insurance company will pay $1,000.
Comprehensive
Comprehensive insurance covers damage to your vehicle from situations other than collisions. This includes flooding, fire, hail, vandalism, theft, and most other causes of damage. If you hit an animal with your car, comprehensive insurance typically pays for the repairs. Like collision coverage, comprehensive insurance includes a deductible.
Further Reading: Understanding the difference between Comprehensive and Collision Auto Insurance.
Liability
Liability insurance covers injuries or damages you must pay if you are found legally responsible for causing injury or harming someone’s vehicle or other property during a car accident. This type of insurance will cover legal expenses if you’re sued by the other party, too.
There are two types of liability coverage. Bodily injury liability covers the other party’s medical expenses, funeral expenses, lost wages, or other costs resulting from the injury sustained during the accident. Property damage liability pays for repairs or replacements for the person’s vehicle or other possessions.
Medical Payments
Also known as MedPay, medical payments insurance covers medical bills for you or your passengers who are injured during an accident. It will cover funeral expenses if you or a passenger is killed in a crash, too.
MedPay provides coverage no matter who is at fault for the accident. It fills in any gaps left by your health insurance plan, and it doesn’t include a deductible or co-pay.
Personal Injury Protection
Personal injury protection is similar to medical payments insurance, but it provides some additional coverage. For example, personal injury coverage will pay for lost wages for you or a passenger after an accident. Like medical payments coverage, it doesn’t matter who’s at fault with personal injury protection.
Uninsured Motorist
Uninsured motorist coverage will pay for damages from a collision with a driver who doesn’t carry insurance. This includes medical expenses beyond what your health insurance will cover. It covers you if you’re hit by an uninsured driver while walking or biking, and it covers hit-and-run accidents.
This type of coverage extends to underinsured drivers, too. If the at-fault party’s coverage isn’t enough to pay for the damages, the rest will be paid for by your uninsured motorist coverage.
There are a wide variety of other types of auto insurance, too. Some are highly specific to certain needs and circumstances. When you’re shopping for a policy, you can look into the other types of coverage the company offers.
Which Type Should You Buy?
Creating your auto insurance policy can be difficult. You have to choose which types of coverage you want as well as how much coverage you need in each category. There isn’t one option that will work best for everyone. Here are three things to consider when deciding on an auto policy:
State Minimums
Different states have different car insurance requirements, so understanding your state’s laws should be your first step in choosing your coverage. Almost all states require liability insurance. If you’re looking into Atlanta car insurance, Georgia requires a minimum bodily injury coverage of $25,000 per person and $50,000 per accident. Atlanta auto insurance also requires property damage coverage of at least $25,000 per accident.
George doesn’t require any other coverage beyond liability. Some other states require personal injury protection, uninsured motorist coverage, or other types of insurance.
Don’t use state requirements as your only guideline, though. In most cases, the minimum coverage won’t be enough to fully protect you in severe car accidents.
Financing a Car
Most lenders require borrowers to have collision and comprehensive insurance when they’re financing a car. This protects the lender in case the car is totaled.
Your lender may require that you carry more than your state’s minimum coverage. It’s critical that you meet your lender’s requirements for the entirety of your loan. If your lender realizes that you’re not carrying their required insurance, they may repossess the car.
Your Finances
Your personal financial situation is one of the most important factors in deciding which coverage to buy. First, determine what you’re able to spend per month on car insurance. Then, list the types of coverage by priority.
Liability insurance is probably the most important because it covers injury or damage to other people and their property. These bills can get extremely expensive and can lead to legal problems if you can’t pay.
You may decide whether or not to get MedPay or personal injury coverage based on your health insurance plan. If you have great health insurance, you may not have to worry much about paying your own medical bills after an accident. If you don’t have good coverage, though, paying for MedPay or a personal injury plan could save you thousands of dollars if you’re injured in a crash. These plans also cover your passengers, so they can be valuable if you drive frequently with others in the car.
To decide whether or not to get collision and comprehensive insurance, ask yourself what would happen if you totaled your car without coverage. How big of a financial loss would it be? Could you pay for extensive repairs or for a new car?
With collision and comprehensive, you can also decide on the size of your deductible. A lower deductible means higher monthly premiums, but it will also minimize the financial toll of an accident. Your deductible should be low enough that you’ll be able to pay it without extreme stress.
No one expects to get into a major accident. Unfortunately, though, it happens all the time. You should have coverage for any amount that would financially devastate you. This varies from person to person.
If you have a lot of disposable income or a big emergency fund, you might not need extensive collision or comprehensive coverage. However, if even a small accident would be difficult for you to bounce back from financially, you need the security of better coverage.
It’s easier to pay a little extra each month in an expected, recurring bill than it is to face an unexpected financial catastrophe. With thorough research and comparison shopping, you can find cheap car insurance that suits your needs.
There are many decisions to be made when it comes to choosing a car insurance policy. Atlanta auto insurance requires liability insurance, but a lender on a financed car may require more extensive coverage. Depending on your financial situation, additional coverage may be important to prevent a financial burden after an accident. Car crashes are stressful enough already, but knowing that you’re sufficiently covered by your insurance makes everything a little easier.
