There are several things to think about when you decide to buy insurance for your car. Depending on which state you live in, there is generally a minimum requirement for auto insurance coverage established by state law. One example is the state of Colorado, where the minimum requirements for auto insurance coverage are 25/50/25. This relates to bodily injury liability limits. What this means in plan language is that the insurance company will pay $25,000 per person, $50,000 per incident, and $15,000 for property damage. These then are the rock bottom minimum requirements as established by law. It is definitely a good idea to have more than that in bodily injury and liability/property damage coverage. In the case where you might be the cause of a multiple-car pile-up, or in the case of an accident where you are the cause and a few people are injured, it is most likely that you will have caused more damage than you may have thought possible. For this reason alone, the additional premium you would be paying for more coverage is very much worth it, and this is true even if you are a conservative spender.
Comprehensive Coverage and Collision Coverage
It is also of importance to consider what deductible amounts might be appropriate when you are purchasing a used car. It is important to bear I mind that the greater your deductible, the less you will be paying in premium for that year. Be aware as well, that there are two forms of deductibles: that for comprehensive coverage and that for collision coverage. Comprehensive relates to any damage that might result in your vehicle because of vandalism, acts of God, hit-and-run, or by hitting an animal. Collision comes under the situation where you actually hit another vehicle while driving on the road. While there is no affect on your future premiums as a result of claims made on the comprehensive portion of your policy, the collision portion means that a claim can negatively affect you future premiums. For this reason it is wise to have a lower comprehensive deductible, and a greater collision deductible. An example might be to have a comprehensive coverage deductible of $100 and a collision deductible of $1000. In addition, replacement of glass is covered under the comprehensive deductible. There are insurance companies that have a $0 deductible for glass coverage, so ask your agent about this.
Dealing with Used Cars Worth Less than $2000
If you are driving a used or older car that is not worth more than $2000, then cover it with liability insurance only. In this way you will not find yourself paying a deductible on collision that might be more than the car is actually worth. Don't forget, however, to get sufficient coverage under the bodily injury liability coverage portion of the policy, snc this could cover you in the case where you might be at fault in an accident. In the case where you are in an accident and someone is injured, you can't simply claim that you have no money and have no coverage. In either case you must pay for the injuries or property damage incurred.