But you do need to decide whether to buy it and how large a deductible to take. The higher the deductible, the lower your premium will be. Collision coverage is important to have if a car is new and valuable, but less important as the value of the vehicle declines.
Collision insurance is not generally required by state law. Comprehensive — Covers the cost of miscellaneous damages to your car not caused by a collision, such as fire and theft. As with Collision coverage, you need to choose a deductible. The higher deductible you choose, the lower your premium will be. Comprehensive coverage is generally sold together with Collision, and the two are often referred to together as Physical Damage coverage. If the car is leased or financed, the leasing company or lender may require you to have Physical Damage coverage, even though the state law may not require it.
Medical Expenses — Covers the cost of medical care for you and your passengers in the event of an accident. The limit you choose under Medical Expenses coverage is the maximum that will be paid for medical claims to each driver.
In some states, this coverage is limited to bodily injury, while in others it may cover property damage, as well. The limits required and optional limits that may be available are set by state law. What teens drive is almost as important as how teens drive. Learn why. Get the Forbes Advisor newsletter for helpful tips, news, product reviews and offers from a name you can trust.
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Having higher levels of insurance is an important part of protecting yourself financially. Although New Hampshire does not require auto liability insurance, drivers in this state need to show financial responsibility to cover accident expenses and purchasing insurance, which may include UM coverage.
Thirteen states require personal injury protection PIP coverage. Gap insurance typically covers the difference between the value of your car and the balance of your car loan if your vehicle is totaled. Your deductible is the amount you pay out-of-pocket towards claims for your vehicle. The good news is there is no deductible on your liability coverage, but for your comprehensive and collision policies, insurance companies will ask you to choose a deductible level. There are some instances where only carrying liability coverage makes sense.
Drivers who can afford to replace their car out-of-pocket may not want to spend the extra money on full coverage car insurance. If you have a new car, luxury car or an expensive vehicle, you might want to carry collision and comprehensive coverage as well. If you have a loan on your vehicle, you can carry gap coverage as well. Each state has different rules and regulations regarding insurance requirements.
Some states have much higher minimum coverage levels than others, and sometimes even require you to carry additional coverages such as personal injury protection PIP and uninsured motorist coverage UM. Car Insurance Guide for the Savvy Consumer. Liability Car Insurance. Rachael Brennan is a professional freelance writer. She has been published on a number of websites, including Adweek, Glamour, and Cracked. You can follow her on Twitter rachaelbwriter.
By Rachael Brennan. Reviewed by Mark Fitzpatrick.
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