Costs

Automobile insurance comes down to risk, like most other types of insurance. Since risks can’t be calculated according to what kind of driver you actually are, they are instead calculated according to statistics about your age, sex, marital status, and type of car. If you’ve been driving for a while, your driving record is also considered an indicator. These calculations of risk help the insurer to try and estimate how likely it is that you will file a claim. Unfortunately, this can mean that the odds are stacked against you – for instance, if you’re male, under the age of 25, and single, you’re more likely to pay a higher premium. Some insurance companies will choose to reject you altogether based on your profile. However, it’s important to note that there are a lot of different insurance companies out there and in addition, they’re competitive. This means that you should be able to find savings if you do your homework when it comes to shopping for a policy.

Bodily-Injury Liability

Across the United States, most states require you to purchase bodily-injury liability treatment. This covers costs associated with medical care, rehabilitation, lawyer’s fees, and/or funeral costs for your passengers or other drivers and their passengers. Pedestrians are also covered by bodily-injury liability treatment. However, the state-mandated minimums are too low to actually protect the majority of motorists. Unless your combined assets and income are extremely minimal, you should look into purchasing a minimum of one hundred thousand dollars per person and three hundred thousand dollars per accident.

Property-Damage Liability

Property-damage liability applies to the damage of other persons’ cars and/or property in the event of an accident. While the state minimum is set at fifteen thousand dollars, you should look into purchasing at least thirty thousand dollars worth of coverage, as that will cover the average cost of a new car.

Uninsured/Underinsured-Motorist Liability

This coverage applies to a situation wherein your car is struck in a hit-and-run or by someone who is not adequately insured or not insured at all. As with bodily-injury liability, this benefit covers the medical care, rehabilitation, lawyer’s fees, and/or funeral costs of the passengers in your car. In addition, it also applies to any similar situation in which members of your household are stuck as pedestrians. Purchase the same amount as bodily-injury liability.

Personal-Injury Protection (PIP)

This type of protection is commonly known as “no-fault.” It covers the costs of medical care, rehabilitation, lawyer’s fees, and/or funerals for everyone in your household. Additionally, it also covers a percentage of potential lost wages and in-home care, if required. In this case, you can purchase only the minimum premium required.

Other Considerations

If your economic situation allows it, you might want to consider other add-ons. Collision liability will either replace or your car following an accident, according to the option that is least expensive. You must buy this kind of coverage if you have recently purchased a new car with money loaned from a bank or other financial institution. Comprehensive liability covers theft of either your car or its contents, fire damage, water damage, and other hazards. If you own a car that is worth less than five thousand dollars, don’t bother with this additional coverage.