Driving is a privilege, not a right. Anyone that owns or operates a vehicle on public roads needs to understand the risks involved and take steps to protect themselves if something goes wrong. Auto insurance is one of the primary ways to do that, as it helps you recover from financial loss after an accident. But what kind of auto insurance do you need in Louisiana and how much coverage do you need? It depends on your individual circumstances. There are different types of auto insurance policies with varying degrees of coverage. You'll want to understand which ones will best suit your needs.
Auto Insurance Basics
If you are like most people, you don’t read the fine print. You just want to know the bottom line. Like many people, you probably don’t have a clue what auto insurance is all about. The best way to begin understanding auto insurance is to know the different components of a standard policy. Premium - The amount of money you pay for your monthly insurance coverage. Deductible - The amount you pay out-of-pocket for each claim you file. Your deductible will vary according to your insurance company and policy type. Coverage - The types of risks that an insurance company is willing to cover for you. Liability - The amount of money you agree to pay other people if you cause an accident.
What is Collision Coverage?
If you are in a car accident that is your fault, collision coverage will help you pay for the repairs to your car. If you have comprehensive and collision coverage on your policy, the company will pay for damages to your car no matter who is at fault. Collision coverage will only pay if you are at fault. The more collision coverage you have, the less your out-of-pocket expense will be when filing a claim. The minimum amount of collision coverage needed is based on the value of your car.
What is Comprehensive Coverage?
Comprehensive coverage pays for damages to your car regardless of who is at fault. If your car is stolen, vandalized, floods, or is hit by an animal, this coverage will pay for repairs. While this coverage helps protect you from some risks, it won’t pay for everything. It won’t cover regular wear and tear, ongoing issues with your car like a leaky roof, or defects in your car that were there before the policy was started. The amount of coverage you need will vary depending on the current value of your car.
What is Property Damage Liability Coverage?
If you are in an accident that causes damage to another person’s car or property, this coverage will help you pay for the costs associated with that accident. The amount of coverage you need will vary depending on the state you live in and the type of coverage you have on your policy.
What is Uninsured and Underinsured Coverage?
If you are in an accident with an uninsured driver, this coverage will help you pay for the damages associated with the accident. If you are in an accident with an underinsured driver, this coverage will help you pay for the difference in costs between the amount the other driver’s insurance paid and what your damages were.
How Much Auto Insurance Do You Need?
Insurance companies use a formula to determine the amount of insurance you should have. This formula factors in the minimum amount required by law, your current assets, and the value of your car. Underinsured Motorist Coverage has a direct impact on the amount of insurance you should have. The more UM/UIM coverage you have, the more you should have overall. The less UM/UIM coverage you have, the less you should have overall. While calculating the right amount of insurance can be a bit complicated, it’s important to know how much coverage you need.
Conclusion
Auto insurance is a way to protect yourself from financial loss in the event of an accident. There are different types of auto insurance policies with varying degrees of coverage. You'll want to understand which ones will best suit your needs.