How Much Insurance Do You Need?

Buying the kinds and amounts of insurance you need is difficult because you cannot predict the future. You do not know if, or when, you will be involved in an auto accident or the amount of damage that might be caused. However, there are three general guidelines that you should follow when you buy insurance to protect your future financial security and to keep your present insurance premiums as
low as possible. These guidelines are:

• The more you have to protect, the more insurance you need. If you own a home and are regularly employed at a good wage, you probably should buy more insurance than the minimum coverage required by law. 
• Buying insurance to cover your own smaller losses may be unnecessary. If you take a higher deductible or do not buy collision coverage on an older auto, you may save money. The key to this guideline is to decide how much you could pay in the event of an accident without causing yourself financial hardship. 
• You should discuss your insurance needs with your agent. It is this person's job to help you choose the types and amounts of insurance coverage you need.
  
  The amount of liability insurance you buy above the required amount depends on how much you have to lose. You could be required to pay a large amount of money if you or a family member causes a traffic accident. A $100,000 settlement or verdict against a negligent driver is not as uncommon as it used to be. If you have purchased only $50,000 of insurance, and there is a $100,000 settlement against you, you will be personally responsible for the remaining $50,000 in damages.

You should buy more than the minimum limits required by law. This increased insurance coverage is available at a modest additional cost. Insurance companies generally offer bodily injury liability limits of $100,000/$300,000, $250,000/$500,000 or greater. Purchasing coverage at the increased limits offers you additional protection at a small increase in premium.

You should also consider buying higher property damage insurance limits than required by law due to the recent increase in the costs of new automobiles and the costs of automobile repair work. The minimum limit required for property damage coverage is $20,000. Insurance companies will generally offer higher limits such as $50,000 or $100,000 at a very modest additional cost.

Remember that you or a member of your family could cause an accident in which a number of other automobiles are destroyed or there is damage to a wall or fence. If you only have property damage insurance at the minimum limit of $20,000 and the total amount of damage is greater than $20,000, you will have to pay the remaining cost of repairs to all the damaged property out of your own pocket. This is an important factor to consider when you select your property damage insurance limits.

Uninsured/underinsured motorist coverage protects you in the event you are injured by:

• a driver who does not have insurance
• a driver with liability coverage less than youruninsured/underinsured motorist coverage
• a driver whose liability limits are not high enough to cover your
  losses, or 
• a hit-and-run driver.

If you buy only the minimum amount of this coverage and you are in a serious accident caused by a hit-and-run driver, you may not have enough insurance to pay all of your own auto repair and medical bills. Or, if you are severely injured by another driver who only has the limits of $25,000/$50,000/$20,000, this may not be enough to cover all your losses.

Although you can never be certain that a driver who injures you will have insurance or enough insurance, your ability to buy additional uninsured/underinsured motorist coverage gives you control over your own financial security.

The amount of uninsured/underinsured motorist coverage you purchase will equal the amount of your liability coverage unless you specifically request a lower amount.

If you buy only liability insurance, and you cause an auto accident in which you are injured and your auto is damaged, your auto insurance policy will not pay you for your own losses. Liability insurance pays only for losses you cause to others. Uninsured/underinsured motorist coverage pays for your losses, but only if these losses were caused by someone else without insurance. To be fully protected you should buy optional insurance to cover your own losses in any accident, even one that you cause. The major optional coverages that will guarantee that you can pay your own auto repair and medical bills are comprehensive and collision coverages and medical expense and loss of income benefits coverage.

Collision and comprehensive coverage will pay you the "actual cash value" of your auto if it is stolen or totally destroyed. Generally, this means that you will only be paid the current market value for autos of similar model and year. The company will not pay the cost to replace your auto with a brand new, current model vehicle of similar quality and equipment. Several factors should be considered when purchasing collision and comprehensive coverage. The age of the car may be the most important. As your auto gets older, the actual cash value decreases. If you are financing your auto, your lender will probably require you to keep collision and comprehensive coverages until the loan is repaid.

Deductibles - Collision and comprehensive coverages protecting you against damage to your auto can be bought at a much lower price if you take a "deductible." This means that you agree to pay a specific amount, anywhere from $50 to $1,000, from your own pocket to repair or replace your auto before you collect from your insurance company. For example, if you have a deductible of $100 and a loss of $500 occurs, you collect $400 from your insurance company. If a loss of less than $100 occurs, you pay for all of it yourself. If you take a deductible and pay for small losses yourself, your company can give you a discount. This way you can cut your insurance premium costs and still be protected against large losses. You should choose a deductible you feel you can afford without causing financial difficulty if an accident occurs. A large deductible will lower your insurance premium costs the most on your collision coverage, but you should also consider a deductible when you buy comprehensive coverage.

Medical Expense and Loss of Income Benefits Coverage - Medical Expense Benefits Coverage will pay you, your family, or occupants of your auto for reasonable and necessary medical, hospital, or funeral expenses that you have as a result of an auto accident regardless of who caused the accident. If the injured person is employed, disability coverage will pay for loss of income up to $100 per week for 52 weeks. If a single policy covers two, three or four autos, the total amount of medical expense and loss of income benefits coverages under that policy would be the total of the amounts on all of those autos. If you and your family are already covered by some other form of accident and health insurance, such as Anthem, or if you have adequate disability income coverage, you may not need medical expense and loss of income benefits coverages. But before you decide not to buy this coverage please consider:

• Health insurance usually covers only you and your family. It does not cover others who may be injured while riding in your auto. If you want to cover these people, you should buy medical expense and loss of income benefits coverages. 
• Your other health insurance policy may exclude losses caused by auto accidents. If auto accidents are not covered, you should consider buying the medical expense and loss of income benefits coverages. 
• Your health insurance policy may limit the amount you can recover to less than the total cost of all medical treatment you received.
  

Also, few health insurance policies provide loss of income benefits. Comparing the benefits of your health insurance policy is a complicated process. You may wish to discuss your health insurance coverages with your employer or agent before shopping for auto insurance.