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How much coverage do I need?
Almost every state
requires you to buy a minimum amount of liability coverage. Chances are
that you will need more liability insurance than the state requires
because accidents cost more than the minimum limits. If you’re found
legally responsible for bills that are more than your insurance covers,
you will have to pay the difference out of your own pocket. These costs
could wipe you out!
The Insurance Information Institute (I.I.I.) recommends that you have
$100,000 of bodily injury protection per person and $300,000 per
accident. If your net worth is more than $300,000, consider buying
additional liability insurance. You may also consider purchasing an
umbrella or excess liability policy. These policies pay when your
underlying coverages are exhausted. Typically, these policies cost
between $200 and $300 per year for a million dollars in coverage. If
you have your homeowners and auto insurance with the same company,
check out the cost of coverage with this company first. If you have
coverage with different companies, it may be easier to buy it from your
auto insurance company.
In addition to liability coverage, consider buying collision and
comprehensive coverage. You don't decide how much to buy. Your coverage
reflects the market value of your car and the cost of repairing it.
Decide on a deductible—the amount of money you pay on a claim before
the insurance company reimburses you. Typically, deductibles are $500
or $1,000; the higher your deductible, the lower your premium.
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RIGHTS RESERVED -
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