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August 3rd, 2023
Buying car insurance is typically not a topic covered in driver’s education or part of any driver’s license test. And while most people understand the concept of car insurance to cover damage to your car if you wreck it (known as collision coverage), there is a good deal more to car insurance. In fact, insurance is as critical to driving as having a license and a registered vehicle. For one, states typically require every driver to carry at least a minimum amount of insurance to cover damage to another driver if you crash into them. But insurance also protects your assets and helps others that may be harmed by your driving mistakes. This post is intended as a primer to give you some things to consider beyond basic collision coverage when buying car insurance.
There are a variety of different coverage options to choose from when buying car insurance, but generally speaking there are three main types of coverage to consider that are designed to protect YOU from the consequences of a car wreck. Those are liability coverage, uninsured/underinsured coverage, and medical payments coverage. Liability coverage is sort of the classic coverage we all basically understand. Liability insurance provides money to another driver who is hurt and/or whose car is damaged by your driving mistake. The general idea of liability insurance is to provide the insurance company’s money to the damaged party, so the damaged party can’t come after your personal money or assets, which they can if you don’t have any or not enough liability coverage.
Medical payments coverage works like health insurance and is designed to pay for any medical treatment you or another injured party may require. And then there is underinsured/underinsured motorists coverage. As the name implies, this coverage is designed to provide you with additional money to cover your damages if you are hurt by the fault of another driver that is either driving without insurance (and likely violating the law) or without enough insurance to cover your damages. This coverage really is critical, because most states require very low amounts of liability coverage (typically on the order of $12,500 to $25,000). This uninsured/underinsured coverage typically costs less than liability coverage, and I often counsel my clients thinking about buy g more coverage to strongly consider putting a good portion of their additional premium funds towards purchasing this coverage. With a healthy amount of liability and uninsured/underinsured coverage, you can best protect your assets both from your driving mistakes and the mistakes of others who don’t carry sufficient insurance to make you whole for their mistakes.
