Do you know how much car insurance you need? Do you know which types of coverage best suit your needs? With so many options available, shopping for coverage can be a confusing and frustrating experience. In this article, our professional staff here at Killey Insurance are diving deep into the world of car insurance and helping you learn important reasons you need the right coverage and ample limits.
Your Car is Damaged in an Accident or Non-Collision Event
Car damage can happen to anyone – even the safest of drivers. Whether you are involved in a multiple-car accident or walk outside to find a fallen tree on your car, collision and comprehensive coverage can help you deal with the financial fallout. Both help pays for physical damages to your car, but they differ in the type of damage-causing events they cover.
Collision insurance is designed to protect you against financial loss if your car is damaged in an accident. It could be a single-car accident or a pileup on the highway; either way, collision protection will help pay for repairs to your vehicle. If your car is totaled beyond repair, your insurance will compensate you for your loss so that you can find a replacement.
Comprehensive insurance covers damages to your vehicle caused by incidents other than collision. Like collision coverage, comprehensive pays for vehicle repairs or helps to reimburse you for a total loss. So rest assured, if you hit a deer, suffer hail damage or your vehicle is stolen from your driveway – you’re probably covered.
If you are like many Wisconsin drivers, you might be making payments on your vehicle. People who finance or lease their vehicles are typically required to purchase collision and comprehensive coverage to protect the lender’s financial interest in the vehicle. Even if you are not in a situation that requires you to purchase physical damage coverage for your vehicle, however, you should still consider adding it to your coverage. Without it, you could face thousands of dollars in repairs or worse, a total loss that leaves you without a vehicle.
How Much Collision and Comprehensive Coverage Do You Need?
Unlike other types of insurance, collision and comprehensive coverage amounts are pre-determined by your insurance company. For most vehicles, coverage is extended based on the actual cash value of the vehicle. Exceptions apply for collector’s vehicles and antique cars, which may be covered based upon an agreed value.
Though you do not choose coverage limits for collision and comprehensive insurance, you do have to select a deductible. The deductible is the amount of money you are responsible for paying out of pocket toward the cost of a claim. Deductibles come in many different sizes. You may also be able to choose a different deductible amount for your collision than for your comprehensive protection. Typically, the highest deductibles generate the lowest premiums, but you should never choose a deductible outside the realm of your budget.
When You Damage Someone’s Car or Property
In Eau Claire and everywhere else in the Badger State, drivers are responsible for the damages they cause to other people’s property. If you hit another car, run into a business storefront, or back over your neighbor’s fence, you could be sued for the damages. Victims will recover compensation from your property damage liability insurance before pursuing you personally for any remaining costs that exceed the limits on your policy.
It is important to note that all drivers in Wisconsin are required to carry a minimum amount of property damage liability. However, the state minimums are typically far too low to fully protect you against a major financial loss if you are involved in more than just a fender bender.
For example, a driver that hits and totals a brand new Jeep could be responsible for as much as $45,000 in property damages. With only the state minimum of $10,000 in coverage, that would leave the driver with a $35,000 bill to pay out of pocket. If it were you, would you have enough coverage to pay for the damages, or would you have to liquidate income and assets to cover the cost?
Continue reading part two of “How much car insurance is enough?”