There are a number of factors that should be evaluated prior to deciding on the type of auto insurance coverage and the dollar amount of the coverage limits that you need. Let’s look at each coverage component and evaluate the factors that should determine what makes sense for you.

Bodily Injury

If you are at fault in an auto accident, Bodily Injury coverage pays for the medical treatments, rehabilitation, or funeral costs incurred by another driver, the other driver's passengers, passengers in your car, and pedestrians. Bodily Injury coverage also pays the legal costs and settlements for losses from pain and suffering.

What are my personal assets?

Regarding Bodily Injury coverage what you need to determine is what assets you have to protect. For example, if you rent an apartment and have little savings, you would require less Bodily Injury coverage. If you own a home and have savings and investment considerations you would require significantly more Bodily Injury coverage.

Property Damage Liability

If you are at fault in an auto accident, Property Damage Liability pays for the damages to another person's vehicle or property.

How much are you willing to risk in out of pocket expense to pay for the physical damage that you cause to another persons property?

Let’s say you have $10,000 of Property Damage Liability coverage. You are in a motor vehicle accident where you are at fault. The other vehicle in the accident is new Mercedes Benz S Class valued at $80,000. You may be responsible for the difference of $70,000.

Collision

Collision coverage pays for the repair of your car or replacement of its market value, regardless of who is at fault.

How old is your car?

If you own a car that still maintains considerable value then you want to maintain Collision coverage that will protect you for the full value of the car. The deductible you choose should be based on what you are willing to pay out of pocket to replace your car. The higher the deductible, the lower your rate for Collision coverage

If you own an older model car that maintains little value, then you may opt to forgo collision coverage completely.

Comprehensive

Comprehensive coverage pays for the replacement of your car or for repairs to your car, if it has been stolen or damaged as a result of events such as fire, wind, or flood.

Similar to Collision coverage, if you own a car that still maintains considerable value then you want to maintain Comprehensive coverage that will protect you for the full value of the car. The deductible you choose should be based on what you are willing to pay out of pocket to replace your car. The higher the deductible, the lower your rate for Comprehensive coverage.

If you own an older model car that maintains little value, then you may opt to forgo Comprehensive coverage completely.

Personal Injury Protection (PIP)/First Party Benefits Medical Payments

This coverage pays physician and hospital bills, rehabilitation costs, and some funeral expenses for you and your passengers in the event of an accident. It also provides limited compensation for services needed during convalescence.

Uninsured/Underinsured Motorist

This coverage pays for damages in the event you get in an accident with either a hit-and-run driver or a driver who doesn't have enough auto insurance.