Auto Insurance: Choosing the Coverage You Need

Most car owners base their auto insurance decisions on the amount of premium they pay. This is not entirely a bad thing. However, beyond premium, consider level of coverage. Check what level of protection you need and what level of risk you can take.

Coverage for auto insurance is categorized into three: red, orange and yellow based on the relative urgency to the insurance holder.

A. Red Category

Liability Coverage

Lawsuit costs are so high, they can dwindle your assets considerably. If you want total protection, don’t hold back on liability coverage, which pays for bodily injury and damage to property caused by anyone who drives your car. It likewise covers costly lawsuits.

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Uninsured/Underinsured Motorist

UM/UIM coverage pays for damage caused by a driver who has no or insufficient liability insurance. If your current coverage for bodily injury is low, top it off with UM/UIM.

B. Orange Category

Comprehensive Coverage

Elements such as harsh weather, theft and vandalism cause damage to your vehicle. For protection, comprehensive or comp coverage is a good buy, especially since it’s inexpensive. However, most comprehensive insurance doesn’t have built-in deductible, and car companies usually require you to carry collision coverage in addition to comp coverage.

Medical Coverage

When there’s an accident, there’s likely to be injuries. This auto insurance pays for medical costs for you, your family and passengers, regardless of who is at fault. This is optional but often very useful because you’ll never know when you need it most.

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C. Yellow Category

Collision Coverage

Collision coverage hedges against any damage your vehicle may have during a crash, particularly if you can’t pay for car repair or fix it on your own. If you own an old, less valuable car, consider increasing your deductible or dropping collision coverage to reduce premium. Collision coverage helps to pay for costly repairs.

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Emergency Road Coverage

This is affordable yet neat to have because this covers for rental costs when your car is for or under repair. It likewise covers for the costs of towing, locksmith and road assistance.

So whenever you consider buying auto insurance, think beyond your premium. Take into account the coverage and protection you need, and hedge against future costs related to car ownership.

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