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What type of car insurance do I need?

Currently, forty-seven states in the country require that a motorist must maintain some form of insurance in order to drive legally. The monetary amounts of insurance you may be required to carry vary from state to state. A state's guidelines for the types of policies and minimum coverage limits are the first item you must consider when determining what forms of insurance you need. It is also prudent to be mindful of the confines of your budget when you are selecting the coverage amounts of your policy. A third item to consider when selecting a policy is what your personal needs will require from your insurance.

Determining Your State's Requirements

A state will usually subscribe to one of two systems when an automobile accident occurs: the no fault policy or the Tort system. The system by which your state operates will determine what forms of insurance you must carry. However, there are nine states who do not follow either one of these policies. You can contact your local Department of Motor Vehicles to determine what forms of coverage and what the monetary amounts of that coverage will be.

Under the rules of a Tort system, one party must be deemed at fault in an accident. When this determination is made, this party and their insurance company then become financially responsible for the cost of the other parties' medical expenses and the cost of their property damage repairs. Generally, it is mandatory for a motorist to carry a liability policy. A collision policy will be required for any vehicle with an outstanding loan on it.  Additionally, there are states who will require you to maintain uninsured/underinsured motorist coverage as well.

For states who operate under a no fault policy, each motorist involved in an accident is considered to be at equal fault. Each driver's insurance company will assume financial responsibility for the property damage and medical expenses for themselves only. A motorist who lives in such a state will be required to maintain uninsured/underinsured motorist coverage and personal injury protection coverage in addition to a liability policy.

Meeting Your Personal Needs Within Your Budget

Knowing what your personal needs will require from a policy is your next step in determining what sort of car insurance you should get. The facts to consider when determining your personal needs include what type of car you drive, the age and value of your vehicle, and any other motorists who may be included on your policy. If you drive a new vehicle, you might want to consider adding optional comprehensive coverage to your policy to act as a supplement to your collision insurance.

Comprehensive insurance will cover the full cost of repairs to your vehicle despite who may be at fault in an accident. It also provides monetarily for the repairs you might incur due to "an act of nature".

If you have an older vehicle that is paid off, you may want to consider carry only a minimum liability policy on the car. Collision insurance will only provide a monetary amount towards the repairs of your car that is equal to the current value of the car. As the value of a car depreciates the more it is driven, it might not be the most financially wise decision to carry this form of coverage on an older car.

When you purchase car insurance from a traditional provider, an agent will attempt to convince you to purchase add-ons to your policy. These add-ons may include rental car reimbursement, towing and/or roadside assistance, or an additional policy for covering medical expenses. It is completely at your discretion whether or not you would like to purchase these. However, if you already have comprehensive health insurance, it would not be necessary for you to purchase a policy for your personal medical expenses. Knowing your needs will allow you to work within the confines of your budget.


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