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How Much Car Insurance Do I really Need?

How much car insurance do I really need? — This is one of the top questions that we get asked in our profession.

Well my friends, the answer is not as simple as you may think. — Many times, people just want the cheapest price and lowest coverage that their state allows.

Why though?Why would you put yourself, your family, your assets at risk? — Tell me why, to save a few dollars a month, would you allow the chance of one incident to take everything you’ve worked so hard for? — Is that ONE Starbuck’s drink or your Netflix monthly subscription worth losing your home for?

As Certified Financial Educators and Insurance Professionals, our mission is to provide you with the knowledge of Insurance and the different coverage options out there. So that you can sleep at night knowing that you have the best rate to go along with enough coverage to protect your assets.

There are a few things that you need to factor when trying to figure out how much car insurance you should have.

  • Number One — You have to comply with the minimum requirements of your state for Auto Insurance. You can check what that is here.

  • Number Two — How much do you need to protect yourself and your family from possibly losing everything with just one incident? The answer to this isn’t always simple, but we will go through a few things to help you figure this out.

Let’s get started:

  • What is Comprehensive Coverage and what is Collision Coverage?

Comprehensive Coverage — An optional auto insurance coverage that protects your car against damage not resulting from a collision, as well as from theft. It covers a wide array of events that can damage your car, including vandalism, fires, and rockslides on twisting mountain roads.

Collision Coverage — When your vehicle is damaged in an accident, collision insurance is an optional coverage that pays the cost of repairing or replacing it, minus the amount of your deductible. Collisions can involve another vehicle or an object, like a guardrail or a tree. If you lease or finance your vehicle, you may be required by your lender to purchase collision insurance coverage.

  • What is a Deductible?

Deductible is a specified amount of money that the insured must pay before an insurance company will pay a claim.

  • Should I have comprehensive and collision coverage?

YES, you should —

• If you don’t have the money to replace your car.

• If you don’t have the money to fix your car.

• If your car is 10 years old or less.

• If you live in an area with extreme weather hazards.

Now, that doesn’t mean that just because the four situations above don’t apply to you, that you should not carry comp and collision coverage. Let’s say your car is older than 10 years but it’s worth $2,500 or more, then you likely will want to have comp and collision. For comp and collision, you will need to pick a deductible, anything under this deductible amount is yours to pay.

  • Should I just get my state minimum liability requirements?

Typically, the answer to this is NO — However, if you have no assets and no savings, or if you just can’t afford more, then your state minimum will at least keep you driving on the road legally.

Think about this, your state minimums will certainly not be enough to replace a newer car nor will it be enough to pay for any serious injuries.

Let’s say on one hand — You drive an old car, you aren’t a homeowner, and the you only own the clothes you are wearing, then the minimums might be ok for you. Now, if you were to be at fault in an accident and someone sued you, there wouldn’t be any assets for them to take, because you don't have any.

On the other hand — You own your home, you have money in the bank, and you have valuables that you own. Now, If you were to be at fault in an accident and someone sued you, they could possibly take everything you’ve worked so hard to earn.

  • “..but I’ve never been in an accident! I’m an excellent driver!”

My friends, an accident is just that, an accident! Here is the definition of accident. Accident: An unforeseen and unplanned event or circumstance. Lack of intention or necessity. An unexpected happening causing loss or injury which is not due to any fault or misconduct on the part of the person injured but for which legal relief may be sought

Yes, I believe you, you did not mean to do it. Unfortunately, that doesn’t mean that you won’t have to pay the consequences of the accident. That is why you need to be sure you have proper coverage.

There are so many factors when it comes to insurance coverage and how much you should have. Each one of you will have a different situation, we understand that and we are here to help you find out how to get you the best rate while protecting what you value you most.

Call our office, schedule an appointment, and sit with one of our professionals so we can help.

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