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As we all know, most states require the owner of a motor vehicle to carry Auto Insurance on that vehicle. And if that vehicle is financed, the lending institution requires insurance as long as they hold the title. Insurance is necessary and even a blessing to those of us who have had to use it. The problem with auto insurance is it is too confusing to calculate just how much you need. Looking at all the components of an auto insurance policy can make your head spin. There’s comprehensive coverage, collision, liability, GAP insurance, personal injury and uninsured motorist coverage just to name a few. How can you be sure you are adequately covered? Most people are under or over insured.
A few auto insurance components that are relatively easy to figure out are comprehensive, collision and GAP coverage. Comprehensive coverage will reimburse you for damage done to your car like weather events or vandalism. Collision coverage will cover the damage to your vehicle caused by an accident with another vehicle. GAP coverage will cover the amount left on a car loan if something happens to the motor vehicle. Perhaps you owe $15,000 and your car is now only worth $12,000. The GAP coverage will cover the remaining $3,000. Other coverages on your policy are not so easy to estimate. The uninsured or underinsured coverage will protect you from those drivers who don’t have insurance or are underinsured. Liability coverage is the one coverage that might be where you discover you need to consider several things.
Liability coverage will help cover you if you damage another vehicle or injure another person in an accident. You want to make sure you have sufficient coverage if a lawsuit is filed against you or if medical bills for an injured party are astronomical. A lawsuit can wipe out any assets you may have, including a home, stocks, bank accounts or future wages. Having adequate liability coverage can protect these assets.
Many people complain about the high cost of car insurance. It can seem like an expense that shows no benefit. You just keep paying the insurance company with seemingly nothing in return. Nothing in return, that is, until you need it. At the time you need it, you will be grateful you took the time to protect your car and your assets; thus protecting your family from possible financial ruin.