Car insurance: How much do you need, and is it that big of a deal? Some states, it’s required. Yes, it is. Hey there, folks, my name is David. I’m a financial coach. Today we’re going to talk about auto insurance. We’re going to break down some of the basics inside your policy. What you should think

about getting. What you should maybe drop or lower. What you should increase. Get you educated on your automobile coverage. Car insurance is great because if you get in a bad accident, and assuming you’re coming out

okay, and your car needs to be repaired, the insurance should ideally take over, at a certain dollar amount, the repairs and replacement costs of your vehicle. There could be some items inside your policy that you’re not familiar with or that you’re not sure you should have, and that’s what we’re going to

look at. Let’s just run down the basic terms and conditions that are inside your policy and kind of talk about what they mean and how they affect you. The first thing that’s on the list there usually is liability coverage. Now liability coverage does not protect your car or even you. It protects your pocketbook

or your wallet. If you’re in an accident and it turns out to be your fault, liability coverage will cover the third-party costs that came with the accident. Things you would typically be responsible for such as medical costs, auto repair costs, things that would happen to other people in the accident. You would not be paying for all that stuff, your insurance would. So how much of that

should you get? Short answer: As much as you can. Now some states don’t even require liability insurance. However, I think if you were to skip on this one, you’d be making a really big mistake. There’s two types of liability coverage: bodily and property. Again, if you were to get in a wreck, instead of you having to pocket the repairs of somebody’s car or medical expenses or

whatever would happen, your insurance will pick that up if you have liability on your policy. When you’re looking at your car insurance policy, under the liability section you’ll probably see something to the tune of $250,000/$500,000/$250,000 or 250/500/250. What that means is this: $250,000 of coverage for bodily injury per person; half a million of coverage

for bodily injury per accident; and a quarter-million of coverage for property damage per accident. You want those numbers up pretty high. You want to make sure that you have that policy in place. In case something terrible happens, the insurance can pick up that bill and make sure that stuff gets taken care of. The next section that you might see is comprehensive coverage. This is going to be stuff that happens to your car as a result of hail

damage, a tree falling on your car, someone breaking your car because they threw a baseball at it. In some cases, theft, fire
— pretty much damage that is not due to an auto collision, to a car collision, is going to be comprehensive. So whether you’re driving a beater or a brand new car, you’re going to want to have some of this up there pretty high to make sure that stuff is going to be covered if the unthinkable happens and a

tree falls on your car, or somebody throws a baseball through it, or it catches fire, or all of the above. Going down the list, you may see something called collision. This is the classic that we think of when it comes to car insurance. You’re driving down the road, you hit a piece of black ice, the radio’s too loud, something’s going on, and you get hit. Or you hit something,

that something being another car a truck. You get into a car accident. This part of the policy will help pay for the repairs of your car. With this part under your policy, it doesn’t really matter who’s at fault. The insurance will repair for your car and get it fixed. This option may not be as popular for those who have an older car, a beater, and they’re getting ready to sell it and upgrade to a car. You may not necessarily need to have this portion on your policy.

Another option you’re going to see on that policy is medical. Now, whether you have medical insurance or not, this part of the policy will cover some of your medical expenses if you get injured in an accident. Some states like mine actually require you to have some sort of medical coverage on your policy. The last one we can talk about is uninsured or under-insured motorists. This coverage kicks in if the opposite party does not have any

insurance, or they are underinsured, and they can’t cover what happened in the accident. Now, two important things you should you should consider when looking at your auto insurance is your premium and your deductible. Now your deductible is what you pay once you reach that point, the insurance takes over. For example, if your deductible is a thousand dollars,

anything that happens to your car that is under a thousand dollars, you pay. Once it breaks over that amount, the insurance takes over at that point. Your premium is what you pay monthly, or every six months, depending on how you do your insurance. Now they’re connected to each other. The higher your deductible, the lower your monthly premium is going to be. If you want a

super-low deductible of 250 bucks
— after 250 dollars the insurance takes over and covers everything
— be prepared to pay more in monthly premiums. If you have a solid emergency fund, and you have three to six months of expenses, and you know that if you need to you could really cover a lot of damage to

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