Let's start by talking about collision coverage. In the event of an accident, collision insurance compensates you for damage to your own vehicle; but if you haven't paid off your auto loan, your lender most likely requires you to carry collision. If you own your own car outright and it's relatively new, you'll want to carry collision coverage to help you make repairs or recover some of its value if it's totaled. Either way it's probably one of the most costly portions of your overall premium. If you own a car free and clear and it's old enough not to have much actual cash value, it may make sense to cut your premiums by either raising your deductible or dropping your collision altogether.
Now, deciding how much liability coverage you need; this is the most important part of insurance. That's because the biggest risk a driver takes getting behind the wheel is the potential damage they could do to another driver's property or health. You'll want bodily injury liability coverage of at least $100,000 per person and $300,000 total as personal injuries are usually the most expensive part of an accident. And you're going to want $50,000 for property damage. All states require motorists to carry a minimum amount of liability coverage, but minimum policies can leave you more likely to be targeted by lawsuits in the event that you're involved in a really serious accident.
Now, deciding if you need personal injury protection. That's coverage that compensates you for your own injury-related expenses, health care costs, work income lost while recovering from your injuries, and childcare expenses. If you've got good health insurance and disability insurance already, you may not need personal injury protection at all.
Good luck protecting yourself, your car, and your wallet. To learn more about car insurance, visit Bankrate.com.
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