Determining Auto Insurance Coverage

Deciding whether or not to go for auto insurance is a no-brainer, since the law insists on it. The tricky part is figuring exactly how much auto insurance one needs, since governments often mandate only the minimum coverage, which is bodily injury and property damage. However tempting it might seem, minimum coverage will not really help in a major accident and you could end up paying out a huge chunk of your savings.

The saying goes that less insurance is no insurance at all, and it applies to auto insurance too. Raising the deductible component to lower premiums is a tried and tested technique, but it is definitely not a good idea if you wish to save trouble later. There are several factors that you would need to consider while deciding the extent of auto insurance coverage you need.

A new vehicle would require higher coverage to cover the investment. Comprehensive coverage is essential for more expensive vehicles. Another indicator is your net worth; opt for more insurance if your net worth is high as it can protect you in case of legal action. High net worth coverage is offered by most insurers and the premiums remain reasonable since claims are few. Umbrella policies are usually recommended by insurers themselves if the buyer's net worth exceeds a particular minimum.

If you drive very often in an accident-prone area, it would be wise to ensure adequate coverage. If you regularly have passengers in your car, especially young children, you might want to beef up the policy to cover their needs in the event of an accident.

The extra payment to boost your auto insurance might seem futile, but accidents can happen anytime. At that point in time you really wouldn't want to be bothered about finding funds to cover expenses. View insurance as an investment that will ensure you're not sorry later.