You have heard the old saying you get what you pay for, which is to say that if you pay for something cheaply, then you cannot always expect it to be reliable. This holds true when it comes to your auto insurance, certainly, since minimal coverage will only provide you with minimal protection. However, it doesn’t help to buy high amounts of coverage either, because you might face a scenario where you are paying too much for coverage that you don’t realistically need.
When it comes to auto insurance, balance is the name of the game. Cheaper coverage might provide ineffective assistance, while high coverage might be too expensive and provide wasted benefits. Therefore, it is best to work with your agent to determine both what coverage you need, and how much of it is right for your vehicle and budget.
What Auto Insurance Coverage is Most Essential
Every driver needs car insurance because of the critical assistance it can provide you with repair bills and other costs following accidents or other driving hazards. It is so important that most states require their drivers to carry minimum amounts of coverage to begin with. Therefore, this required coverage will be the starting point for your coverage.
Most states require drivers to carry some form of liability coverage, which is also called at-fault insurance. If you are at fault for a wreck, then liability insurance is used to compensate the other involved parties for their property damage or injuries.
Furthermore, if you buy a new car and then finance it to pay off the lease, you might be required of your lender to buy physical damage insurance (collision & comprehensive coverage). These benefits will ensure that you have the money to repair or replace your car following damage.
If you do not carry the minimum amounts of required coverage, then you could face significant penalties from the courts or from your financial lender. However, there is no requirement that limits you to only carry these minimum benefits within your auto policy. While the minimum coverage is often the most budget-friendly, by increasing your coverage you will have more assistance available in case of a costly and loss to your vehicle.
When Is Buying More Coverage Too Much?
If you increase your auto insurance coverage arbitrarily, you might find that you have actually bought too much coverage.
On one hand, increased liability coverage can provide you with additional coverage for at-fault accidents, and you never know when a third party’s losses will be excessively high. Therefore, it is recommended that you increase this coverage to a higher limit, provided that your premium does not become too much to afford.
On the other hand, if you have paid off the value of your car, but still have physical damage coverage, then there might come a point where the value of the car is negligible. Therefore, any settlement you receive for a damage claim might not be worth the premium you pay for coverage. At this time, it might be reasonable to drop your physical damage coverage, provided that you feel comfortable paying for any damage to your own vehicle yourself.