What Auto Insurance Coverage Should I Have?

Either way, you’ll still be responsible for deciding just how much coverage you enroll in. And there are certain scenarios that call for more and more expansive coverage. Let’s take a look.

Except for New Hampshire and Virginia, every state in the country legally requires a minimum amount of property damage and bodily injury liability coverages. Many states have also started to require some form of uninsured or underinsured motorist coverage as well.

Both liability coverages protect other vehicles and persons if you’re involved in an accident and deemed to be at fault. Uninsured and underinsured motorist coverages protect your vehicle, you and your passengers if you get into an accident with someone who’s either uninsured or doesn’t have sufficient coverage.

As we mentioned earlier, you’re required to maintain property damage and bodily injury liability coverages in every state except two. So the vast majority of the U.S. population of drivers is legally required to purchase auto insurance.

These coverages kick in when you’re involved in an accident that’s deemed to be your fault. Property damage liability will help pay to repair or replace any vehicles or property, like mailboxes or fences. Bodily injury liability will help pay for medical bills of the injured parties, as well as lawsuits that arise from the injuries.

These two coverages are designed to kick in when you’re in an accident with another driver who doesn’t have any insurance at all, or just doesn’t have sufficient insurance to cover the damage to your vehicle or injuries to you and your passengers.

While each works a bit differently, states have been stepping up recently to ensure more and more drivers are required to purchase this coverage. With more and more uninsured and underinsured drivers on the road, it’s happening just in the nick of time.

If you’ve leased your vehicle or took out, and still owe money on, a loan, your lender will require you to purchase full coverage auto insurance. So your auto insurance coverages are already chosen for you. However, you still get to determine the amount of coverage for the most part.

Full coverage auto insurance is different from liability only because it can protect your vehicle and the passengers inside it, including yourself. Full coverage generally includes collision, comprehensive and some form of either personal injury protection or medical payments coverage.

This coverage is designed to pay to repair or replace your vehicle if you’re involved in an accident — whether it was your fault or not. Collision coverage is essential for newer vehicles, but those older vehicles may be just fine without it.

Comprehensive coverage is designed to pay to repair or replace your vehicle if it’s damaged or destroyed by something considered to be out of your control. The most common instances of this coverage kicking in is your vehicle getting stolen or being damaged by something like a falling tree due to a hurricane, tornado or another natural disaster, or being damaged due to a flood.

Personal injury protection (PIP) or medical payments coverage may or may not be required, but they’re similar, awfully affordable and necessary for many drivers. These coverages are designed to pay for the medical bills of anyone injured inside your vehicle after an accident — whether you were at fault or not.

If you own your vehicle outright, you’re likely only required to purchase the state-mandated minimum liability coverages. But just because that’s all you’re required to purchase, that doesn’t mean that’s all you need to purchase.

In fact, the state minimum coverages are put in place more to cover minor accidents than to cover the vast majority of accidents. So there’s a good chance having only the state minimums will leave you vastly underinsured if you’re involved in an accident.