Reader question:
I just bought a new car. What kind of car insurance coverage will I need?
Olivia
Good question.
Usually your financing company will require a certain amount of insurance from you. They want to protect their own interests, so even if you don’t go out and get insurance yourself, you could find that your financer has taken the first step and picked out insurance for you, and expects you to pay the bill. So, however you cut it, if you get a new car you’re going to need to keep your auto insurance coverage current or risk losing your car. But what kind of coverage?
Your financer probably requires you to have collision coverage as well as comprehensive coverage. Collision covers you if you get into an accident and you are at fault, and comprehensive covers any losses off the road, perhaps due to natural disasters or theft. In addition to this, you’ll need to have the minimum required by your state, which usually includes liability for injury and property damage and uninsured/underinsured motorist coverage.
The state sets certain amounts of liability coverage that you need to have, but just because it is the required amount doesn’t mean it is the best. Most states require something along the lines of $15,000 of liability for each kind of coverage, injury and property. However, it’s recommended that you up that amount to $100,000 per person, $300,000 per accident, and $50,000 for property damage, and the same amount for uninsured motorist coverage. This may seem like a lot, but it could save you a lot of money in the future.
Cheers,
Fashun Guadarrama.