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The importance of auto insurance: How much should you carry on your policy?

Auto insurance is not just an essential financial safety net; it’s also a legal requirement in most states. Virginia currently allows drivers pay $500 to register their vehicle as uninsured, but that policy is going away on July 1, 2024.

The reality is that, even if you had paid the $500 to drive uninsured, you’d likely be on the hook for a lot more than that if you were involved in an accident. Beyond financial protection, knowing that you have insurance can also provide peace of mind. Accidents are stressful enough without having to worry about the financial implications. Having the right insurance coverage allows you to focus on driving carefully and getting your life back on track after a crash.

How much coverage should you carry on your policy?

Specifics vary by state, but Virginia requires insured drivers to carry liability coverage of at least $30,000 per person and $60,000 per accident, along with property damage coverage of at least $20,000. In addition to that, with the state policy that allows people to drive uninsured, it requires uninsured and underinsured motorist coverage of $30,000 per person, $60,000 per accident, and $20,000 for property damage. Failing to carry adequate auto insurance can result in fines, license suspension, legal repercussions, and financial hardship.

Is it possible to have too much insurance?

While you may be tempted to opt for the minimum required coverage to save money, this could leave you exposed to significant financial risk in the event of a more serious accident. Beyond the legal minimums, here are some factors to consider when determining the right coverage:

1. Your assets: Consider your personal financial situation. If you have substantial savings or assets, you should consider higher liability limits to protect yourself from potential lawsuits.

2. Vehicle value: The value of your vehicle matters. If you have a new, expensive vehicle, comprehensive coverage and collision coverage may be wise to ensure a full repair or replacement of your vehicle is possible.

3. Driving habits: If you drive frequently or have a long commute, you might want additional coverage to account for a higher exposure to potential accidents.

Policies and options to consider

Beyond the basic liability coverage, there are various optional policies and add-ons that can enhance your insurance protection. Each type of coverage accomplishes different things, so it’s important to understand where the coverages overlap and where they leave you vulnerable:

1. Collision coverage: This policy pays for the repair or replacement of your vehicle if you’re involved in an accident, regardless of fault. Your liability coverage applies instead when you’re found at fault for an accident with someone else. When someone else is at fault for hitting you, their liability coverage kicks in to cover your losses.

2. Comprehensive coverage: This policy covers non-collision events, such as theft, vandalism, natural disasters, or hitting an animal.

3. Uninsured/underinsured motorist coverage: This protects you if you’re involved in an accident with a driver who has no insurance or insufficient coverage.

4. Personal injury protection (PIP): This covers medical expenses for you and your passengers, regardless of fault. The key word is injury though. It doesn’t cover vehicle damage.

5. Rental car coverage: This is an additional amenity you can add to your policy to help with the cost of a rental car if your vehicle is in the shop for repairs after an accident.

6. Gap insurance: This is useful if you’re financing a vehicle because it covers the difference between the vehicle’s depreciated value and the amount you owe on your loan if the vehicle is totaled. Used in conjunction with your comprehensive or collision coverage, gap insurance allows you to pay off your vehicle and start from square one.

The importance of auto insurance

Whether you’re a seasoned driver or just starting, understanding the value of having auto insurance is crucial. The policy you purchase may seem expensive until you need it to cover an unexpected accident. Costs quickly escalate, even in minor fender benders, and without insurance you could be personally responsible for covering medical expenses, vehicle repairs, property damage, and legal fees.

Investing in a robust auto insurance policy is just as important as hiring a quality personal injury lawyer who can help fight for the compensation you deserve in the event of an accident. If you’ve been involved in an accident, Randall Trost and the lawyers at the Trost Law Group will listen to your case, gather evidence, talk to insurance companies and any other parties involved, and assist you through the entire claims process.

As one of Virginia’s leading personal injury law firms since 1982, the Trost Law Group is prepared to represent you and help you through your recovery. Visit them online today for a free case review.

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