Finding the right size for an auto insurance policy requires some thought about your situation. Someone carrying too much insurance is likely overpaying, but someone carrying too little, risks not having a ride if something terrible happens. Here is how to right-size your policy.
Risk Exposure
The first question you need to confront involves risk exposure. When you drive, there's inherent risk. Most motorists focus on the risk to their vehicle. That matters, but they also need to be aware of the risk of being legally responsible for an accident. An insufficient third-party injury policy could leave you on the wrong end of hundreds of thousands, or even millions of dollars in damages if you're at fault.
Risk exposure extends to the various physical risks of regular driving. Somebody who lives in the suburbs might see deer every time they drive at night. They should consider a comprehensive policy that will cover any damages if a deer jumps out at their car.
There are plenty of other risks. If you drive in a high-traffic area, you might want an uninsured driver policy because of the increased risk that the thousands of people around, might not have insurance. Someone who uses their vehicle for a home business should seek business coverage.
Replacement Cost
Replacing your ride is a key part of auto insurance. You never want to have coverage that doesn't cover what you can't afford to pay out of pocket. If your policy has a $1,000 deductible, you better always have $1,000 in the bank, that can go right to covering it in case of an accident. Someone who looks at their bank account and sees it dip below $1,000, should look at a lower deductible. They will pay more in premiums, but they won't have to cover as much if something happens to their car.
The replacement cost of the vehicle also extends to its total value. You might not carry much coverage on a cheap car, if you'd be comfortable buying another one with cash.
Additional Features
Many auto insurers offer additional features. Roadside assistance and towing are common. Especially if you drive a long commute, these can be life savers. If you don't have a backup vehicle, you should consider rental car coverage. Someone who has an auto loan might acquire guaranteed asset protection insurance. GAP insurance makes up the difference in what a driver owes if the insurance company totals the vehicle.
To learn more about Auto Insurance, contact a professional near you.
