Evaluating Your Insurance Needs

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According to all of the auto insurance experts we spoke with, one of the most important aspects to getting the coverage you need is to evaluate what your needs are first.

The first step is to understand the types of coverage, then evaluate your specific needs. To do that you must look at the vehicle you are insuring, your assets and what you have to lose.

What Do You Have to Lose?

Nearly all states have required limits in insurance coverage, which one must have prior to driving a vehicle on public roads. But keep in mind that these minimum limits are just that-the minimum amount needed. Most individuals need far greater coverage, yet these increased coverage limits can be relatively inexpensive. This is particularly so when you look at what you have to lose.

Obviously if you drive a luxury vehicle rather than an economy car, you need to have higher limits in your collision and comprehensive coverage. If you own a home this is an asset to be protected, and if you own more than one residence or have investments that can be attached in a lawsuit, you must include these in your evaluation. Of course, if you rent your home, own nothing except your vehicle, then you can consider staying with your state's required limits.

Keep in mind that the way insurance agents display coverage is normally as numerals separated by slashes, (100/300/50). This indicates limits of $100,000 for bodily injury per person, $300,000 bodily injury per incident and $50,000 for personal property damage.

Succinctly put, this means you are covered for $100,000 for each person injured up to a limit of $300,000 for each accident and up to $50,000 in damage to property. So, if the limits are met immediately after the accident and you get sued for the difference, you could lose everything you have-your house, your retirement, and anything else you might value. So as you can see, it is extremely important that you carefully evaluate your specific needs.

Filling in the Gaps

The one insurance most over looked is Gap insurance. This covers the difference between your limits and the amount you owe on your vehicle. This can be especially useful if you lease your vehicles. If the payoff amount is more than the amount your insurance company deems the vehicle is worth, then you would be liable for the difference. Purchasing GAP insurance assures you that the insurance will take care of the full amount. This coverage is very important in these days of special financing and special deals.

The one thing you get from your insurance company regardless of your coverage is legal representation. It makes no difference what your policy limits are, your insurance company must provide you with an attorney, if you are sued due to an accident. Now how they do that and with what results depends on the company, but you owe it to yourself to do business with a reputable organization-and be an advocate for yourself, which really begins before you make the decision on your insurance coverage and the company you choose.