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.

The Minimum Amount Of Auto Insurance Coverage You Are Allowed To Have

Auto insurance can cost a lot of money, so there are many people trying to lower their auto insurance coverage in hopes of trying to save money. The cost for insurance will depend on different things, like how much coverage you want. The question is, how much coverage is actually necessary. Understanding your state's minimum liability coverage and whether that will be enough to cover you in case of an accident is important to determine what you will want to seek when looking for your insurance policy.

According to Ezine, the definition of "minimum auto insurance" is the minimum amount of insurance a state requires all drivers to carry before they will be classified as "insured." The website states that the "minimum insurance requirement is stated in a/b/c terms."  "A" represents the "amount of bodily injury liability insurance" that's required to have "per person" when an accident occurs. "B" is the amount of "bodily injury liability insurance" needed in that situation, and "C" is the amount of "property damage liability" you need per accident covered in your policy. Typically this amount varies from state to state.

Liability insurance is what's going to cover expenses when an accident occurs; the payout takes care everything for the person you hit. Many insurance companies will recommend that your auto insurance policy cover $100,000 in bodily injury and $300,000 per accident. In addition to liability coverage, there's collision and comprehensive auto insurance that should be considered. Collision will cover any damage to the car, and comprehensive coverage takes care of your car in the case of any "unexpected problems."

According to Insurance Information Institute (III), drivers often need more liability insurance than what's required because accidents can easily cost more than what the minimum will cover. With the lowest coverage, if an accident occurs, you could be legally responsible for bills totaling more than what you're covered for. This means money will be coming out of your pocket to pay the balance. It's good to talk to your agent or a representative about higher liability limits. III also recommends purchasing an "umbrella" or excess liability policy. This type of policy will pay when "your underlying coverage is exhausted." When choosing your policy, you must also choose a deductible – the amount you pay on a claim before the insurance company reimburses you. Most deductibles are $500 or $1,000. However, the higher your deductible, the lower your premium.

Though you must always do research before deciding on a plan, investigating what your state requires and determining if that auto insurance coverage is enough for you is an even more imperative step when deciding on your policy.