How Much Insurance Do You Need ?
 |
The year make and model of your vehicle |
 |
 |
How much of your personal assets you have to protect. |
Your Vehicle(s) In general, are required by law to have Liability Coverage (Bodily Injury and Property Damage). There is a minimum coverage amount required by California (Liability Limits are 15/30/5, $15,000 per person, $30,000 Per Accident and $5,000 Property damage.) If you are buying or leasing a vehicle, there may also be minimum amounts required by your (Bank, Finance Company or Lien Holder etc.) In addition to Liability, you may also want to purchase Comprehensive and Collision insurance to cover your vehicle.
Collision: covers any direct and accidental loss to your car caused by colliding with an object, such as another car, a wall, a fence, etc.
Comprehensive: covers loss to your car from fire, theft, break-ins, vandalism and natural disasters such as an earthquake, flood, hail or hurricane.
The combined Collision and Comprehensive or other than collision coverage is the most expensive part of your auto insurance, generally costing about one-third of the total premium. If you are buying or leasing your car, your lien holder (bank, finance company, etc.) may require you to carry Comprehensive and Collision coverage to protect their interests. If you own your car, many experts recommend to skipping Comprehensive and Collision if your car's resale value or (ACV Actual Cash Value Blue book is less than $3,000.
How Your Car Is Driven: Where, why and how far you drive even where you live are important factors when deciding how much coverage you need. Generally theft and accidents rates are higher in densely populated areas. Big cities also tend to have more uninsured drivers. If you live in a city or high-risk area, you should take this into account when deciding on your Comprehensive and Collision coverage.
The primary use of your car can also affect your auto insurance rates. Most people use their cars to commute to work. If you have a second car or work out of your home, then you probably use your car mostly for pleasure. People who use a car for work generally drive more miles than someone who uses a car simply for pleasure.
Business use: A car would be driving every day for Business, such as realtors, sales persons, pizza delivery and those who carry passengers for a fee. This again generally means an increase use of your car. Research has shown that the more you drive, the more likely you are to be in an accident. Therefore you should probably purchase a commercial policy which will be more detail in coverage’s and higher liability limits.
How much of your personal assets you have to protect: The main part of your insurance protection, and the one that is required by law in State of California, is your Liability Coverage. A part of Liability Coverage is Bodily Injury, which covers injuries to a person as a result of an accident. Within Liability Coverage there is also Property Damage, which covers damage to or loss of someone else's property. While each state has minimum requirements, you also need to consider how much insurance coverage you need to protect your personal assets as well. If you do not have adequate coverage and you are sued, the court could order you to pay more than your limit of Liability Coverage. You would then have to dip into your personal assets to cover the amount ordered paid by the court. Therefore, if you have a home, bank accounts,a reasonably well paying job, you should buy more Liability Coverage than the minimums required by law. Many companies recommend at least $100,000 per person and $300,000 per accident for bodily injury at least $50,000 for property damage.
*Other experts insist even those amounts might not be enough. The more personal assets you have the more you need to protect. So you may want to estimate your net worth and use that figure as a basis for determining how much coverage you would need.
The equity in your home and other property.
The value of major possessions such as automobiles, motorcycles, etc. Any savings or liquid investments you have. Any non-IRA or employers provided pension or retirement benefits.
The total value of all those things, plus add an amount for safety, is what many experts feel you would want your Liability Coverage to protect not just the minimum amount the state requires or even the generally recommended amounts if they are far lower than your net worth. This is where Umbrella coverage’s can be very valuable. If you own a home, you might be able to get Umbrella Coverage that could provide up to $1 million in total coverage. So if there is more information you need to obtain please don’t hesitate to call us or send us a e-mail to services@ertinsurance.com
