Your Car Insurance Needs Are Affected By Important Milestones In ...

Some people purchase car insurance just because it is required of them, and they buy coverage that is adequate for their needs at the moment. As time goes by, they accomplish goals that cause them to need to increase or add coverage they did not have previously. Just three of those milestones are buying a new car, earning more money and purchasing a house.

Buying a New Car

A lot of the time, people?s first cars are used. When they start making enough money to purchase their first new cars, they have reached an important milestone in this society. With this purchase comes the need to acquire more auto insurance.

Generally, a used car does not require that people purchase Collision coverage. The amount of money that people would pay for this option over the years could easily surpass the amount of money that the policyholder would receive if the vehicle is ever totaled. Financial advisors suggest that people forgo Collision coverage on a used car and place the money in a savings account instead.

The new car that people buy will have a higher value than their used cars. It would require that the policyholder spend tens of thousands of dollars to replace it if it is damaged in a collision. This expense would be too much for most people, so Collision coverage would be an appropriate addition to their car insurance policies after they purchase a new car.

With Collision coverage, car owners will receive the fair market value for the vehicle if it cannot be repaired no matter who caused the collision. The insurance company would also pay for the repairs if the automobile is damaged in a collision.

Comprehensive coverage is also an unnecessary expense for a used car, but it offers new car owners many benefits. Comprehensive coverage repairs or replaces a vehicle that has been stolen or damaged in a manner other than a collision, and it is not necessarily needed for a used car for the same reason that Collision coverage may not be needed. However, replacing or repairing a new car can be very expensive, and Comprehensive insurance covers these costs.

Earning More Money

People may not have considered this fact before, but their jobs are directly related to their car insurance needs. When people begin to make a considerable amount of money at work, they have reached another milestone. That?s the good news, but the bad news is that this makes them a target. If they ever cause a collision, the injured parties may hire lawyers and sue them for large sums of money.

In tort states, when a collision occurs, the person who caused it must be determined. The at-fault person is the one who will be required by law to pay everyone?s medical and property repair bills. If they discover that the at-fault person earns a large salary, the lawyers will try to obtain the highest judgment possible for their clients. This can mean that the defendants would be required to liquidate their assets to pay everyone. Or, their wages may be garnished for years if they cannot pay these bills with the money they already have.

When people first start out in their careers, it may be enough for them to purchase their states? minimum requirements. After they begin earning a lot more money, they will need to increase these limits so that they can cover the high judgments they may be required to pay if they ever cause a collision.

Purchasing a House

Many people begin their adult lives as renters, but this leads to another milestone: buying a house. Even when people purchase a house, their auto insurance needs can be affected. After buying a home, people can qualify to purchase an umbrella policy, and this can increase their liability limits even greater than just raising the limits on their required coverage.

An umbrella policy can increase the bodily injury and property damage liability limits to $10 million in some cases. Most people find $1 million to be sufficient. Whatever they choose, it adds much more protection to their auto insurance policies if they ever cause a collision for only an extra couple hundred dollars a year. Once the liability coverage on their initial auto insurance policies runs out, the umbrella policy takes over the bills.

When people meet new milestones, their car insurance needs change, and insurance companies will have an option to fulfill these needs. All policyholders need to do is ask.

Source: http://insuranceassistant.info/?p=14

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