How to Obtain the Right Amount of Auto Insurance

One of the most common questions when a person is purchasing an auto insurance plan is, “How much is enough?” There are certainly plenty of options, depending on your circumstances. Rather than taking a guess, you can answer three simple questions to help you get a good grasp on the amount of coverage you need.

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These questions are:

What is your financial situation?

The higher your coverage limits and the lower your deductibles, the less you have to pay out of pocket after an accident. How much can you afford without straining your finances? That is the first question you’ll need to answer. You should also consider your assets. If you cause an accident but have low liability limits, your assets could be at risk in court. If you have a lot of assets, you should increase your liability limit. Umbrella insurance can protect you if you have a high net worth.

What kind of driver are you?

If you are a cautious driver with no accident history, your better choice could be a higher deductive and lower rate. The opposite is true if you have a history of accidents. You should also consider the type of car you drive. New vehicles are more expensive to insure , because they need more collision and comprehensive coverage. There are fewer benefits to paying more for older cars, as you’d be shouldering most of the cost anyway for post-accident repairs. Finally, your driving habits also play a role in how much coverage you need. Do you have long commutes for work and take regular road trips, or are you simply driving around town to run errands? The more time you spend in a car, the more coverage you’ll want.

Where do you live?

Where you live certainly has an impact on the type of coverage you’ll need. A vast majority of minor accidents occur on urban areas, so if you live in a densely populated environment you’ll likely need more coverage. This is also true if you park your car outside on a crowded street, where it is significantly more vulnerable to vandalism and theft.

Consider these questions as you go about purchasing your auto insurance policy, and you’ll have a much more accurate idea of the kind of coverage you need.