If there is one thing Clear Lake drivers ask us more often than anything else, it’s, “How much car insurance is right for me?” It is a question we answer nearly every day, and each time, the answer might vary a little differently from the person who asked before. That is because car insurance should always be customized to fit your needs based on an assortment of factors. Your policy should protect you against major financial losses. In this article, we will explore some reasons you need the right coverage and why having the right limits is so important.
To Repair or Replace Your Damaged, Destroyed, or Stolen Vehicle
When you find yourself in a car accident or hear the crunch of your car getting smashed by a tree, you know it is time to call your insurance company. As long as you have collision and comprehensive coverage, you can rest assured your policy will cover the damages. If you do not have coverage for physical damages to your vehicle, you could be stuck paying thousands of dollars for repairs out of your pocket. If your vehicle is deemed a total loss, you might have to absorb the loss and purchase another vehicle.
Here at Lillie-Couch Insurance, we know how much it costs to have a car in your garage. Whether you lease, own, or finance your car, your investment is worth protecting. We recommend both collision and comprehensive coverage to cover repair or replacement of your vehicle after an accident or other covered event.
Collision insurance is coverage that pays for damages after a car accident. A collision can include multiple vehicles, or it might just include your personal vehicle if you run into a tree or back into a light post.
Comprehensive insurance is coverage that pays for damages after non-collision events. Examples include theft and vandalism of your vehicle, as well as damage caused by fire, the wind, or hitting a deer.
Note that some drivers are under contractual obligation to purchase and maintain collision and comprehensive coverage for their vehicles. These typically include drivers who lease their vehicles or who have financed them with auto loans.
Deductibles and Coverage Limits
When you purchase your collision and comprehensive coverage, you will be asked to select a deductible. This is money you agree to contribute toward the cost of any future damage claims you make against your policy. Deductibles come in many sizes, usually between $100 and $1,000 depending on your insurer. The highest deductibles typically translate to lower insurance premiums but beware: You never want to choose an amount that you would not have the money to pay for in the event of an unexpected claim.
Insurers will automatically cover most vehicles for their actual cash value rather than an amount you select personally. The ACV accounts for depreciation of the vehicle and is used to determine if damage to a vehicle is worth repairing or if the insurer should simply reimburse the policyholder for the loss. Any reimbursements are paid at actual cash value minus the deductible.
To Repair or Replace Someone Else’s Damaged Property
If you damage someone else’s property in an accident, you will have to find a way to pay for the losses. Here in Wisconsin, drivers are required to carry a minimum of $10,000 in property damage liability insurance. This is designed to pay for at-fault damages to other people’s property and vehicles, but the limits are often too low to cover the full cost of damage repairs after a serious incident.
For example, if you hit a luxury vehicle, total a couple of cars in an accident, or plow through the living room wall of someone’s house, you can expect the damages to add up to tens of thousands of dollars. The victim’ insurance company may pay for the damages and then sue you to recover costs. Why only cover part of your liability when your property damage liability insurance can take care of nearly everything?
When you work with our team, we assess your coverage needs to ensure you get coverage that protects you against property damage lawsuits. Contact us for more information about property damage liability and to find out if you are underinsured.
Continue reading part two of “How much car insurance is enough?”