The smartest thing for drivers is to increase their liability levels as high as they can reasonably afford to go. If you are at fault in an accident and injure someone else or damage their property, you will be held liable for their expenses.
Drivers without enough liability coverage to pay those costs will still be held responsible. Sign up to get updates from MoneyGeek including how to overcome your financial headwinds, hack your finances, and build wealth.
Liability insurance is a requirement in 49 out of 50 states. New Hampshire is the only state that does not require insurance, but it does, however, require you to prove you can meet the New Hampshire minimum financial responsibility requirements in the event of an accident. Each state has different laws regarding liability insurance requirements, with some requiring uninsured motorist coverage or personal injury protection, and others requiring only bodily injury and property damage liability.
How much car insurance do I need and how much car insurance is required are two very different questions. State requirements are often much lower than the amount necessary to protect you financially in the event of an accident. You want to have full protection if you cause a significant amount of damage in an at-fault accident. You will also want the highest levels of personal injury protection PIP coverage, uninsured motorist coverage and other coverages required by law in your state.
If you have a loan on your vehicle, your lender may require comprehensive and collision coverage. Other coverages, like gap coverage or windshield coverage, may also be requirements by your lender to make sure you are protecting their investment. There are a lot of ways your car can be damaged, so making sure you have protection against any potential loss is a smart decision. You can also use MoneyGeek's car insurance calculator to get a more specific estimate based on your age, vehicle and driving history.
Having higher levels of insurance is an important part of protecting yourself financially. Although New Hampshire does not require auto liability insurance, drivers in this state need to show financial responsibility to cover accident expenses and purchasing insurance, which may include UM coverage. Thirteen states require personal injury protection PIP coverage. Gap insurance typically covers the difference between the value of your car and the balance of your car loan if your vehicle is totaled.
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Personal injury protection PIP is similar to MedPay but has more extensive coverage, higher coverage limits and a higher premium. Here are some things PIP may cover for you:. Though it varies from state to state, PIP usually offers immediate coverage up to the limit set by your auto insurance and would need to be used up before you have to tap into MedPay or your own health insurance policy.
With the cost of new cars continuing to climb, the average length of a car loan has expanded to six years or more, making GAP insurance more popular than ever.
Our recommended auto insurance coverage? Skip GAP insurance and save yourself a financial headache by buying a used car with cash in the first place. If you already have a car loan, make it your goal to pay it off as quickly as possible so you can drop the GAP coverage and lower your premium.
Temporary car insurance is another type of coverage you should know about. Instead, it comes in the form of non-owner car insurance or rental car insurance. Our advice? Save your money and skip this coverage. So, how exactly do you make do without a car after an accident? It covers the cost of a rental car up to a specific dollar amount and number of days while your car is in the shop.
If your car tends to sit in the garage collecting dust, you may be interested in pay-per-mile coverage. Or that time you hit a pothole and were left with two flat tires? Roadside assistance coverage saves you in these moments. It covers having fuel brought to you, getting your battery jumped, having your car towed to the nearest repair shop or replacing a dead battery. You may be wondering, Why would I purchase an umbrella liability policy if I already have liability insurance? To save money, insurance companies often use aftermarket parts when they replace or repair parts on your vehicle.
Original Equipment Manufacturer OEM endorsement coverage ensures that the same parts your manufacturer safety tested and used to originally build your vehicle will be used on your car.
Did you know that just one at-fault accident can significantly increase your insurance premium? Depending on your insurance company, this coverage may only apply once per policy term , or it may take years of safe driving to go into effect. If you live next to a golf course, you may have found yourself wishing you had glass coverage to pay for the cost of fixing or replacing the windows on your car.
Some insurance companies offer glass coverage with no deductible, but the cost of the added coverage may outweigh the benefits, especially with some policies only covering the windshield.
This will protect your investment if that Chevy Corvette is damaged or stolen. Driving for a rideshare company like Uber or Lyft is a great way to make some extra cash. If you choose a high deductible, your insurance company looks at you as a lower risk and will reward you with a lower premium.
If you choose a low deductible, your insurance company sees you as a higher risk and will—you guessed it—give you a higher premium.
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