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Buying Auto insurance

Buying Auto insurance

Crazy Things to Know Before Making the First Move

Bodily injury liability coverage:

Most states require bodily-injury liability insurance to cover medical treatment, rehabilitation and funeral costs incurred by your own passengers, other drivers, their passengers and even injured pedestrians. State minimum-coverage limits are too low to protect the assets of most motorists. Unless your income and assets are minimal, buy at least $100,000 per person, $300,000 per accident. Other costs covered include lawyers’ fees and non-monetary losses related to pain and suffering.

Damage to Property:

With the average cost of a new car at $30,000, however, buy at least $35,000 in coverage. Property damage liability covers repair or replacement of other people’s cars and property. State minimum limits average about $15,000.

Uninsured drivers:

When a hit-and-run driver, or someone who’s inadequately insured, strikes your car, uninsured-motorist and underinsured-motorist coverage pay for the medical, rehabilitation, funeral, and pain-and-suffering costs of the victims in your car. This crucial coverage also insures your household members as pedestrians. Buy this coverage at the same limits as your bodily injury liability coverage.

Personal-injury protection (PIP)

Try to buy this minimum required. Often known as “no-fault,” this covers medical, rehabilitation and funeral costs for household members, as well as some lost wages and in-home care.

Consider the following options to fit your pocket

Collision Coverage:

If you have bought a new car with a loan, you’ll be required to buy this coverage, since the insurer pays to repair or replace your car after an accident.

Comprehensive Coverage:

Pays if your car or its contents are stolen, or if your car is damaged by fire, water or other natural disasters.

Things you can ignore

Medical payments

If your state requires it, buy the minimum. This coverage pays the deductibles and co-payments not covered by your health insurer, or the insurer of any of your passengers. It also covers some funeral and rehabilitation costs. It’s not useful unless you face very high health-insurance deductibles.

Towing and labor

Members of auto clubs with such privileges don’t need this coverage. This only pays if you can’t drive your car away from an accident and require towing vehicle.

Glass breakage

Try to avoid it, since glass breakage coverage can add up to 20 percent to your comprehensive premium.

Rental insurance

Exclude the expense if you don’t rent cars often and can depend on another car to travel.