You may understand the different auto insurance coverage types available and which types are mandatory, but what about the coverage amounts? Let's break down the different coverage's and the average amounts that each coverage requires.
Understanding Coverage Amounts
Coverage amounts are generally referred to as three numbers, such as 20/60/10. You've mostly like seen these numbers time and time again, not necessarily understanding what they refer to.
What exactly do those numbers mean? In the 20/60/10 example, those numbers would translate to:
* First Number: In this case, 20 translates to $20,000 in bodily injury coverage per person
* Second Number: In our example, 60 translates to $60,000 in bodily injury coverage per accident
* Third Number: In our example, 10 translates to $10,000 in property damage per accident
The best way to remember the coverage amount meanings is "bodily injury per person/bodily injury per accident/property damage per accident." In our example, each person injured in an accident would be covered up to $20,000 in expenses, but the total amount could not exceed $60,000.
It is recommended to have at least $100,000 of bodily injury protection, or the coverage amount per person, and $300,000 in coverage amount per accident. In the case that expenses exceed those amounts and you are at fault, a lawsuit would result in you owing the difference.
Ask your auto insurance agent as many questions as it takes until you completely understand the different numbers associated with coverage. Have your auto insurance agent describe different scenarios in which each amount would be beneficial, how a lesser or great amount would affect you, and your options to change those amounts in the future. Your past driving history, type of car, and typical commute are all factors in deciding the coverage type and amount that is best for you.
Mandatory Coverage Amounts By State
Each state differs in the coverage amounts they require. While your auto insurance company can assist you in finding out what your state requires, you can also find out state requirements online.
Visit your state government owned website to determine mandatory personal injury protection, property protection insurance, residual bodily injury or property damage liability coverage amounts. Also work with your auto insurance agent to determine whether your needs require that you exceed the mandatory coverage amounts set by your state - if you travel frequently or have a negative driving history, you may want to go above the recommended coverage amounts that your state has set.
How to Determine What Coverage Amounts You Need
While it may seem practical to choose the lesser of coverage amounts your auto insurance company offers, if you end up being at fault in an accident and are sued because of your fault, not having enough money to cover expenses will result in you owing money out of your own pocket.
There's no way to predict when an accident will happen or how much damage an accident can cause or cost. Be prepared and work with your auto insurance agent to select the coverage amount that is best suited for you.