If you own a car, you are legally required to insure your car. Not only does this protect you, but it also protects other drivers that you may encounter. But how much do you actually understand about auto insurance?

How Much Coverage Do You Need?

When shopping for auto insurance, you need to be aware of the state minimum requirements for your insurance. Most states mandate that you carry at least some bodily injury and property damage coverage. This is determined by person and by accident for bodily injury and by accident for property damage. While the minimum amount is usually the cheapest, it may not be enough coverage for you. You are responsible for everything your insurance doesn’t cover, so if you get in an accident, you could be on the hook for thousands of dollars. When determining how much coverage you want, talk to your insurance agent about the best amount for you, based on your car and how much you drive.

What Determines Your Premium?

There are several factors that determine your insurance rates. While the amount of coverage you are purchasing is the biggest factor, there are other factors that can drive your rate up or down. Your driving record is a huge indicator of how much you are going to cost insurance companies, so you if you have been in an accident or have a lot of tickets, you are going to have to pay more. Companies will also look at how long you have been driving, the type of car you are driving, where you live, and your insurance history. All of these things can indicate the risk that you pose so your company will evaluate your payments based on that.

What Kind of Coverage Do I Need?

While you are required to carry bodily injury and property damage liability insurance, it may be worthwhile to look into other types of insurance. The required liability insurance will only cover you in the case of an accident that you cause, but it will only pay for the other person and their car. If you want to protect your car, you need collision insurance to protect it from accidents or comprehensive insurance to protect it from other damage. If you are hurt during the accident, you will want personal injury protection. If you are not fault, but the other driver is uninsured or flees the scene, you will need uninsured motorist coverage. Take the time to evaluate your car, the area you live in, your driving habits, and the chances of needing other insurance before you write them off.

Is It Actually Worth It?

You are required to have auto insurance by law, but is it actually worth it? Should you really add all these different kinds of insurance to your car? You pay a lot of money each month, and you may not see much, if any, return on it. Determining whether the investment is worth it will really come down to your car and how much it is worth to you. If you have a brand-new car, it would definitely be worth protecting while you are still paying it off. This is an investment that you don’t want to lose. If your car is pretty old and nearly dead already, you probably don’t need more than the required amount.

The Bottom Line

No matter what you decide, you should make sure you do your research before you make any final decisions. Everyone has different wants and needs, so don’t take someone else’s word for what you should do. Make sure you understand everything, so you can make the best choice for you and your car.

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