What Kind of Car Insurance Should I Buy? 

After you get into a car accident and have spoken to your insurance company, you usually start to realize that you didn’t buy the right kind of car insurance to help you in this time of crisis. You realize this because you likely didn’t have enough insurance to cover you after you got hit or your car insurance company is hard to deal with and you are left wondering how all of this happened.  

More often than not if you hit someone else, your insurance company is just going to pay out the policy if you have a minimum liability policy, or will fight the case if you have a more expensive policy. You don’t really have to interact with them too much so you might not get the full understanding of what it means to be underinsured.   

Why It’s Complicated

With so many options out there for car insurance you may feel like a kid in a candy store with only $1 to pick what she wants. How are you supposed to choose? With the myriad of options available to you it can be hard to pick a plan. 

You have to decide what is most important to you and start from there. Read the reviews online and make a decision based on your impression from there. You can also call each place and get a feel for how their sales reps act. That will usually tell you the culture of the company and how they may react if you get into an accident. Stay away from the companies that are less attentive or who try to sell you their services aggressively.  

Who Should I Pick?

It is usually best to go with one of the bigger, more reputable, companies that you generally see on national television ads. Stay away from the super low cost regional providers because they might give you cheap prices, but when an accident happens you may find yourself wishing you paid a little bit extra for the better service you would get from one of the big three: State Farm, Progressive, or Geico. You may not get the best rates from them, but, they shouldn’t be too far off from what the local companies provide and you will get superior service because these are multi billion dollar companies with plenty of resources.

What Options Should I Buy?

This is both a personal preference and a mandated one. It is mandated on the property damage side because your lender will likely require you to buy full coverage insurance, which includes comprehensive and collision insurance, in order to protect the financed vehicle from damage or theft. Of course, you can buy some add-on coverage to that, which just depends on what makes you comfortable. For instance, do you want to pay out of pocket for a rental car in the event you cannot use your car for a few weeks, or are you ok commuting via public transportation or have access to carpool for work? Companies offer rental car insurance to deal with that, so those types of add-ons are available. 

How Much Insurance Should I Buy?

For comprehensive and collision coverage, the amount of coverage is going to be based on the actual cash value of the vehicle at the time of the loss. You don’t get to choose this amount, but you do get to choose the bodily injury coverage when you pick insurance. This is the amount of money paid to someone you injure as a result of your driving error. The minimum limit amount is mandated by law, but you can, and should, buy more coverage.

This is probably the most important question for you to answer. The general rule is to have coverage that is at least equal to your net worth. So, in the event that someone has injuries resulting from your fault, they do not sue you for more money than your insurance covers. So you would add up things like the equity value of your house, cash, other personal property, stocks, bonds, etc., and that would determine your net worth. You want insurance that covers more than that.  

Insurance is sold in preset blocks depending on the state where you live. So, you will often see it sold as $25,000/$50,000 or $100,000/$200,000 policies, all the way up to $500,000 / $1,000,000. That first number is how much the company will pay per person for one accident. The second number is the max the policy will pay in total. So, if there are three people injured in a car you hit and one person has $50,000 and the other two have $25,000 of damage each ($50K + $25K + $25K = $100K), you will be fully covered with a $50,000 / $100,000 policy.  

But, in that same scenario if you bought the $25,000/$50,000 policy, they could technically sue you personally for more money. If you don’t have the money and they win a judgment against you, it is possible that money will come out of your paycheck depending on the garnishment of wages laws in your state. The reality is, though, most cases that go that far are filed by lawyers who are generally only going to seek the limits of the policy because it is hard to collect against someone personally.

Are There Any Other Types of Insurance I Should Buy?

Yes. Bodily injury will cover you if you hit someone else, but you need to also be concerned about getting hit yourself. The type of additional insurance you should be buying is called Underinsured/Uninsured Motorists’ Insurance (UM) or Personal Injury Protection (PIP), depending on the state in which you live. 

This insurance would save you and your family members, should you be hit by someone who is not carrying enough insurance and who does not have enough money to pay for your medical damages or pain and suffering. Many people who get hit don’t have it and are left wondering why they cannot get the medical care that they need. Unfortunately, many drivers just do not carry enough insurance for when they hit you, so you have to invest in this type of insurance for you and your family. It is protection you can absolutely not go without as a driver on the mean streets of America. 

Of course, speak with a car insurance representative to see what the best insurance would be for you, given your budget, and go from there. Just be certain that this decision is more important than you think and it would benefit you, in the long run, not to just go with the cheapest option that allows you to drive. Speak with a car accident lawyer, like a car accident lawyer in New Orleans, LA, if you have any questions about what insurance might be good to purchase. 


Thanks to Reddy Law Group for their insight into what kind of car insurance people should buy to protect themselves.