Expert Tips for Auto Insurance Beyond State Requirements

Auto insurers are happy to pile on coverages to increase their profit. Meanwhile, policyholders need to meet state requirements but want to keep their rates as affordable as possible. What’s the happy medium? What`s the truth about uninsured motorist coverage and GAP coverage? is it something you need? We’ll share what coverages you should and shouldn’t include/ and when to make auto insurance coverage adjustments.

The Required Liability Insurance Coverage

States set the requirements for car insurance, and nearly every state requires liability coverage. Since it`s required, you don`t have to decide whether or not you need this type of coverage. 

Liability insurance covers your liability when you cause an accident or damage to another party. It does not cover your own vehicle, but there are types of insurance coverage that can protect you from financial loss if you damage your own vehicle

The Financial Risks of Driving

If you cause an accident, you`ll be responsible for paying for the other party`s property damage and the cost of treating injuries. Even if you live in a no-fault insurance state, you`ll have to pay for property damage and medical costs for severe injuries.

When you drive, you implicitly agree to be responsible for those risks. Following an accident, you`ll need to exchange insurance information and the other party will file a claim with your insurer.

The Insufficiency of Minimum Car Insurance Limits

The state minimums vary, but the one thing they have in common is that the minimum coverage is insufficient for adequate protection. 

If your minimum required liability only covers $15,000 of property damage, and the other vehicle requires repairs that cost $50,000, insurance will pay its share and you`ll be responsible for the remaining $35,000 out-of-pocket.

The situation can be even worse for drivers who damage the most expensive vehicles.

Recommendations for Car Insurance Liability Limits

Since the minimum liability requirements are insufficient, you should purchase higher limits. Most people should purchase a policy that includes at least $100,000 for bodily injury liability for one person and $300,000 for bodily injury for multiple persons. They should also purchase at least $75,000 in property damage liability.

These limits are abbreviated as follows: 100/300/75. Liability limits are often abbreviated in this order. 

  • The first number represents the coverage for one person`s injury costs in thousands.
  • The second number represents the coverage total for multiple injured persons.
  • The third number represents property damage coverage.

Some car insurance providers set their own minimum liability requirements available to purchase that exceed state law requirements.

First-Party Car Insurance Coverage

Liability insurance is just the beginning. If you want to protect yourself from financial losses resulting from damage to your vehicle, you`ll need first-party coverage.

Full coverage is the combination of collision and comprehensive insurance coverages.

Comprehensive Coverage

Comrepehnive insurance covers damage to your vehicle following several causes of damage including the following:

  • Natural disasters
  • Weather damage
  • Vandalism
  • Theft

It also covers you if you hit an animal like a deer. 

Collision Coverage 

Collision insurance covers you for losses related to your own car`s damage following a crash. The coverage level will be based on the actual cash value of your vehicle. The cost to insure your vehicle will be directly related to your vehicle`s value.

Both comprehensive and collision coverages include a deductible that you will be responsible for paying out-of-pocket.

GAP Insurance

Guaranteed Asset Protection, or GAP insurance is often purchased in addition to full coverage. Sometimes, when you purchase a new vehicle, the depreciation happens faster than the loan repayment. At some point, you`ll likely be upside down on your loan, especially if the loan has maximum limits for paying back terms.

If your car is declared a total loss, the insurance company will cover the vehicle`s value, but you`ll be responsible for paying back the lender for the difference between that and what you owe. GAP coverage pays for that difference.

Uninsured Motorist Coverage

If an uninsured driver hits your car, uninsured motorist coverage for bodily injuries will help you pay for treating any injuries you or people in your car sustained. You can also purchase uninsured motorist property damage coverage that will pay for your vehicle`s damage. 

Tips for Saving on Car Insurance

There are many ways to save on car insurance, and the following are some of the best tips.

  • Compare insurance quotes
  • Find and apply discounts
  • Increase your deductible
  • Maintain a claims-free record

State requirements are the cheapest option, but knowing you can save on a more robust policy can help you make the decision to purchase coverage beyond the state requirements. 

Melanie Musson writes and researches for the car insurance site, She`s passionate about helping people understand the importance of the right insurance policy for the best price.