How Much Auto Insurance Should You Purchase?

Next to health insurance, auto insurance is the next most popular and important type of insurance you can have.  It doesn't matter where you are in Los Angeles or the country, you're always at risk of having an accident.  Plus, it's required by law to register your vehicle with the state, so it's a must have if you're going to drive legally.

The question of, "How much auto insurance should I purchase?" is a common one.  Of course, your insurance agent's answer to that question is that you should purchase as much as you can afford to purchase.  This is always a good rule of thumb, but one thing is for sure, you have to purchase as much as your state requires you to purchase and then any extra that you may feel you need.  If you don't feel that the minimum amount of auto insurance will cover your vehicle in an accident, then discuss how much more you feel you should purchase with your insurance agent.

Another factor in the decision of how much you should purchase may depend on whether or not your vehicle is brand new.  If it is and you financed the vehicle with a bank, then you are likely going to have to carry some additional insurance on that vehicle.  In this situation, you are going to be required to carry comprehensive physical damage coverage.  This will cover your car if it is damaged by flood, fire or animals.  It also covers it if it is stolen.  This coverage pays for everything minus your deductible.

Collision coverage covers your vehicle in the event that you are involved in a collision accident involving another car or an object.  This will pay for your vehicle minus the deductible.  To keep your premiums low, you can select a higher deductible, but this is the amount of money that you will have to pay out of pocket in an accident. Most people drop collision coverage on older cars because the coverage is generally limited to how much your vehicle is worth.

There are several other types of auto insurance that you can add on to your policy that are not typically required by the state.  These types of coverages are great if you can afford them or if you feel that it is necessary to have that coverage.  For example, if you live in a large city like Los Angeles with millions of other drivers, uninsured motorists may be worth carrying to you because you never know when you might be involved in an accident with an uninsured driver, but it's up to you to decide whether or not you should carry it.

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