Car insurance is mainly needed for 2 reasons:

• to drive legally
• to protect yourself from debt if you have an accident

Everyone knows that insurance is a must when you have a car. Often times without having a proper knowledge on car insurance specifics, people end up paying more money for their car insurance. When you set out for shopping your car insurance, make sure that you are aware of your budget. Do your homework well in advance to save yourself from ending up overpaying for your insurance policy.

Here are some of the facts you must consider.

Do you know what type of insurance you need?

There are various types of insurance plans available and you are free to make your own choice depending upon your budget and needs. You can classify insurance policies based on liability, collision coverage, comprehensive, full coverage, medical coverage, uninsured/underinsured and many others.

Get to know your liability coverage!

Liability coverage includes both property damage and medical bills if you are at fault in the vehicle accident. Generally a liability coverage of $500,000 is advisable to be on the safer side.Repairs for the collisions are covered for an old car if you have liability coverage.

BIL and Property damage liability

Body injury liability (BIL) pays for your medical expenses of the injured people if you are at fault in the accident. 20/50 or a 100/300 policy are most commonly heard terms which depict the maximum amount your policy can pay for the medical expenses of the injured. If you are at fault and have damaged the other car, property damage liability can save you thousands of dollars on the car repair.

Collision/Comprehensive

In case there is a collision, collision repair policy can take care of the repair expenses. You can also get theft protected through the comprehensive insurance policy which is outside of the accident.

Personal injury protection

This policy protects you and the passengers riding with you by covering all the medical expenses incurred after the accident. You may also claim the job loss or loss of pay due to medical reasons after the accident.

How much car insurance do you need?

Many companies sponsor disability and medical insurance. Hence personal injury protection policy can be taken off from your insurance plan. However, make sure that you are adequately covered (about $100,000 on an average) against underinsured and uninsured drivers through your car insurance policy as it may not be covered by your medical insurance at all times.

If you plan to repair your car after an accident, then buying collision and comprehensive coverage is a good option because you can just pay the deductible and get the rest of the expenses recovered from your insurance. Higher the deductible, lower the premium you will pay. On an average for a $500 deductible you may need to pay a premium between $40-$80 and sometimes slightly more. Hence, make sure you spend out-of-pocket for minor repairs and use your insurance for bigger damages to save more on premium.

No-fault insurance is mandatory in certain states where parties can claim from their insurance regardless of who is being held faulty.

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