Choosing Optional Coverage Levels

When buying car insurance, you will have various types and amounts of coverages to choose from. There is bodily injury, property damage and collision coverage, just to name a few. Each state has its own minimum levels of coverage that you need to abide by, but other than that it is up to you to choose the coverage you need.

The following are the two types of coverage most consumers are legally required to maintain:

Bodily Injury

Bodily Injury Liability helps pay for losses if you are at fault in an accident and are legally responsible for others' injuries

Most states have a legal minimum you must maintain but it is your choice whether you need more coverage than just the minimum. If you have a lot of assets to protect, it is probably wise to consult with your attorney or financial planner to determine if you need more coverage.

Property Damage

Property Damage Liability helps pay for losses if you are at fault in an accident and are legally responsible for damage to another's property.

Much like bodily injury liability coverage, your state will have a minimum amount of coverage that you need to purchase, but you can obtain additional coverage if you deem it necessary to do so. Again, it's best to consult with your attorney or financial planner to determine the proper amount of coverage.

Not all the coverage that you can choose from is legally required. Although the following coverages aren't required by law, it may be a wise investment to add some or all of them.

Medical Payments

Medical Payments is optional in most states. If you have an accident, it helps pay for medical, dental and funeral expenses for you or your passengers, regardless of who is at fault. If your injured passengers don't have health insurance, the expense can be even greater.

Uninsured/Underinsured Motorist

Uninsured/Underinsured Motorist Bodily Injury helps provide for medical expenses for you and your passengers if you are injured by a driver who either does not have any (or not enough) insurance.

Although you are not required to purchase this coverage, it is probably wise to protect yourself given the number of drivers operating a vehicle without proper coverage. In certain states, this coverage must be offered by the insurance company, and you can only refuse it by singing a waiver.

Uninsured Motorist Property Damage

Uninsured Motorists Property Damage helps protect your vehicle if your vehicle is damage by a driver who does not have any insurance.

Waiver of Collision Deductible

This coverage is available in certain states and only if you have Uninsured Motorist Coverage. The Waiver of Collision Deductible coverage will pay your Collision deductible if the damage to your vehicle is caused by an uninsured motorist. Example: You have a $500 Collision deductible and you are hit by an uninsured motorist. This coverage will pay the $500 deductible and your Collision will cover the rest of the damages to your vehicle.

Collision Coverage

Collision coverage will pay for any physical damage to you car resulting from a collision. While this coverage isn't required by law, if you are financing or leasing your car, then your lender will require you purchase this coverage.

Comprehensive Coverage

Comprehensive coverage will pay for damage to your car from just about everything other than an accident; such as fire, theft and vandalism. If you decide to go with comprehensive coverage, keep your deductible in mind. Having a higher deductible means a lower car insurance rate, but more money you have to pay out-of-pocket.

Rental Reimbursement

Usually pays $20 to $35 a day for renting a car while your car is being repaired. If you own two cars then you probably don't need this coverage.

Towing and Labor

Towing and labor are usually inexpensive policy additions. However, if you are already a member of AAA or another auto club, then this coverage isn't necessary.

While not all these coverages are required by law, there are benefits to carrying them. Selecting more coverage will increase your car insurance rate, but you shouldn't avoid coverage just to keep your car insurance rate low.