How to Choose Your Auto Insurance Coverage Levels

Auto insurance is one of the most confusing financial subjects, and what you don't know can hurt you. It's important to know how much coverage you need to avoid paying for auto insurance coverage you could do without, or not having enough auto insurance coverage if you ever get in an accident.

Collision and comprehensive coverage are important for new cars or cars that still hold a lot of value. Sometimes consumers end up paying for collision and comprehensive coverage that exceeds what the car is actually worth. If you have a car more than ten years old, or worth less than 10 times the premiums of your collision or comprehensive coverage, you may want to consider dropping that coverage of course under the advice and guidance of an insurance agent.

Having the minimum in liability auto insurance coverage is just a legal requirement. It is always a good idea to have more than the minimum in liability auto insurance coverage to prevent money from coming out of your own pocket after an at-fault accident. If you have liability coverage of 10/25/30, that means your auto insurance company will pay a maximum of $10,000 for personal or bodily injury to one person in an accident, $25,000 maximum personal injury to all persons in an accident and no more than $30,000 in property damage.

If you are involved in an accident that is deemed your fault, your liability auto insurance coverage kicks in, without a deductible. Be sure to ask yourself, will the liability coverage limits I've chosen cover my liability in a serious accident. Liability expenses include medical bills, car repair or replacement, legal fees and pain and suffering payments.