Coverage Level – Basic Coverage

The goal of basic auto insurance coverage is to protect you in case of an accident or other damages to your car, other drivers, or your passengers. In most states, the minimum insurance requirements probably do not provide enough protection to cover your costs and liability in a severe accident.

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A winning strategy for getting the basic protection that you need is to first find out your state's minimum requirements, and then consider your assets and what you risk to lose in an accident. Upon determining your risk tolerance, you may then be able to purchase additional insurance coverage to fill the gaps.

The type of basic coverage you need depends on your lifestyle

Some factors to consider may include the cost of your car; how often you drive with passengers; and the costs or liability you could incur if you have an accident with another vehicle. If you have an old or damaged car, then you may feel it doesn't make much sense to purchase collision or comprehensive insurance. However, if you happen to have a new and expensive car, then comprehensive or collision insurance could be very valuable in protecting your assets.

Consider also the other drivers you may interact with on the road. If an uninsured driver hits you, then you may have to pay the damages on your own – unless you have uninsured motorist insurance. On the other hand, if you are found at fault in an accident where the other driver has a luxury vehicle, then the costs could be very high – even if your car sustains minor damage.

Also you may wish to consider the protections you already have, so that you do not double up on coverage. For example, if you already have medical or full health insurance, you may not find it worthwhile to purchase vehicle coverage for medical payments. Keep in mind, however, that your medical plan won't cover injuries to other drivers, so you would still need liability insurance that is consistent with your state's laws, as well as your own financial situation.

Basic coverage if you don't own a car

Even if you don't own a car, you may want to purchase a basic level of coverage if you do drive others' vehicles on a somewhat regular basis. Basic auto insurance can protect you in case you damage someone else's car, or if you get in an injury accident. You probably won't need a full coverage auto insurance policy, but some coverage may help protect you and your assets.

Basic coverage is cheaper than you think. Request a free quote today!

Sources
http://www.smartmoney.com/personal-finance/insurance/how-much-auto-insurance-do-you-need-10731/
http://www.carinsurance.com/kb/content30281.aspx

**Auto Insurance Finder is not an insurance broker or carrier. Content on this site is for comparison and informational purposes only. The products and services listed on this site may not be available in all states.

Last Updated: November 10, 2009