June 22, 2010

The Difference Between Maximum and Minimum Auto Insurance Coverage Policies

When shopping for auto insurance, it is important to know the difference between minimum and maximum auto insurance coverage. Most states that require drivers to carry car insurance, have laws that will outline what minimum coverage you must buy.

It is also important to know that the minimum limits your state requires may not necessarily be adequate. Car accidents can often cost much more than these minimum limits mandate. It is recommended that you carry at least $100,000 in bodily injury protection and $300,000 per accident. This is known as 100/300 auto insurance coverage.

Furthermore, if you live in a “no-fault” state, your policy must pay cover medical for both yourself and your passengers.

Therefore, you need to consider several things. First, does the state require liability, and if so, how much money in liability do they require. Some, such as Florida and New Hampshire, do not require this. Second, does the state require personal injury protection, or PIP. Also, you need to see if your state is a no-fault state, for the reasons stated above, and whether or not they require uninsured motorist coverage.

Clearly, maximum coverage encompasses more than minimum coverage. Maximum coverage would include liability coverage, medical payment coverage, uninsured and underinsured motorist coverage, and collision and comprehensive coverage.

Collision and comprehensive coverage compensates you for the damages to your car regardless of whether this accident is your fault or if the other motorist’s fault.??Collision and comprehensive coverage involves a deductible. The lower you would like to pay out of pocket after an accident, the higher your monthly insurance bill will be. Comprehensive insurance covers everything not regarding accidents, such as theft, fire, and vandalism.

In order to decide which type of coverage is right for you, several factors need to be considered. The value of the vehicle is the first. If you are driving a fairly inexpensive car, it may make more sense to pay for the minimum coverage available. This insures that if you are in an accident that is your fault, the other car will be covered but yours won’t. If you have a car that you would be unable to replace or repair out of pocket, it would be wise to go with at least collision insurance. Often times, you can save money by not paying for PIP by being covered under medical insurance.

When shopping, it is important to consider what kind of insurance coverage is best for you. Be familiar with your state requirements, the value of your car, and what you can afford to pay out of pocket.