Updated: October 2015
Buying your first car is an important milestone. The independence that comes with having your own set of wheels is a great privilege. At the same time, being a car owner means you've got an important choice to make: What coverages do you need in your first "on your own" auto insurance policy?
It's tempting to ask your agent for the least expensive policy. After all, you have plenty of other expenses to cover now that you're a car owner. However, once you fully understand exactly what each part of your auto policy covers, you may decide that cheaper isn't necessarily better. Think about it: If your car was totaled in an accident, or you seriously injured someone, a few extra dollars of insurance coverage per month might be money well spent.
Here are some of the common coverages to consider for your auto policy.
There are two types of liability coverage. Both are required by law in most states.
- Bodily injury liability: If someone is injured as a result of an auto accident you caused, this coverage could help pay for your legal fees, as well as the person's medical bills and lost wages. This coverage often includes two separate limits: one that applies to each injured person ($50,000, for instance) and a second one that applies to each accident (for instance, $100,000). Learn more about bodily injury liability coverage.
- Property damage liability: If you damage another person's property, such as a fence or garage door, with your vehicle, this coverage can help protect you. Property damage coverage may help reimburse the other party for their losses, so you don't have to pay for them out of your own pocket. Learn more about property damage liability coverage.
- Collision: If you need to repair or replace your vehicle after a collision with another car or object, this coverage can help cover the costs. Learn more about collision coverage.
- Comprehensive: This coverage can help pay for damage to your car that isn't related to an auto accident. Examples: theft, damage by animals, fire or falling objects. Learn more about comprehensive coverage.
- Guaranteed Asset Protection (GAP): If your vehicle is totaled in an accident or stolen, you insurance company typically will pay you fair-market value for the car. However, if you still owe a financial institution more than the car is worth, GAP coverage can help reimburse you for the cost difference. Learn more about GAP coverage.
Need help selecting car insurance coverages that fit your needs? Contact an Allstate agent.