What Car Insurance Do I Need? How to Choose the Right Car Insurance Coverage

If you own and drive a vehicle, you need car insurance. However, you probably aren’t an insurance expert. As such, you may not fully understand the types of coverage you need or what kinds of situations an insurance policy would cover.   

Thankfully, you don’t need to be a car insurance expert — you just need to know where to find one. At Encore Insurance, we take all of the guesswork out of finding the exact right car insurance policy for your needs.

Read on to learn the answer to “What car insurance do I need?” Then contact us to request your free car insurance quote.

Types of Car Insurance

There are five primary types of car insurance coverage that you could include in your policy. These include the following:

Liability

Liability coverage is mandatory in Michigan. This insurance coverage provides funds if you are responsible for a car accident that injures someone else or damages their property. There are two primary components of liability insurance:

• Bodily injury liability: Covers expenses related to another person’s injuries when you are liable in an accident
• Property damage liability: Helps pay for damage to another person’s property resulting from an accident

In Michigan, you must have minimum bodily injury coverage of $50,000 per person and $100,000 per incident. You must also have at least $10,000 of coverage for property damage.

Collision

Collision insurance pays for damage to your own vehicle after an accident, regardless of whether the accident is your fault or another driver’s fault. In most cases, this insurance is only required for leased or financed vehicles. If you own your car outright, you don’t need collision coverage to drive your vehicle.

However, collision coverage can be helpful if you don’t have much money saved up to pay for car repairs. You never know when you may make a wrong move and cause an accident that damages your car. Additionally, if another driver causes an accident but does not have adequate liability insurance, you could use your own coverage to repair your vehicle.

Comprehensive

Comprehensive insurance can cover damage to your vehicle caused by something other than an accident. For example, if you are ever a victim of theft, you can use comprehensive coverage to replace your car. This insurance can also cover damage from weather or vandalism.

Comprehensive insurance is also only required for leased or financed vehicles. However, you may want to strongly consider this coverage if you frequently have to park your car outside or in public parking lots.

Personal Injury Protection

Personal injury protection (PIP) coverage can pay for any direct and indirect medical expenses you experience after an accident. This insurance is required in 12 states. In Michigan, you must hold personal injury protection insurance unless:

• You have coverage under Medicare Parts A and B, and
• Your spouse and any other relatives who live with you have qualified health insurance coverage (unless they have coverage under another PIP car insurance policy)

Uninsured/Underinsured Motorist

Uninsured/underinsured motorist coverage can protect you if another motorist causes an accident and does not have liability insurance to cover your expenses. If the driver is underinsured, they could put their maximum coverage toward your costs, and then you could use your policy to pay for the rest.

This coverage is required in 20 states, but it is optional in Michigan.

Other Car Insurance Components

Now that you know the different types of auto insurance coverage, you can begin considering what coverage options are important to you. However, you should also understand the following components that make up car insurance policies.

Premium

Your premium is the amount you must pay to purchase a car insurance policy. Most car insurance companies charge a monthly premium but allow you to pay the entire year in advance if desired.

Deductible

Your deductible is the amount you will have to pay toward an expense before your insurance coverage kicks in. For example, if your deductible for comprehensive coverage is $500, you’d need to pay $500 toward the cost of your car repair, and your insurance would cover the rest.

Coverage Limit

Finally, most insurance policies have coverage limits, which indicate the maximum amount you can receive for specific claims.

Factors That Could Impact the Coverage You Need

When you purchase an auto insurance policy, you can choose what coverage your policy includes and the limits of each coverage option. Here are a few factors that could affect the coverage you need for your vehicle.

Your Budget

In the long run, owning car insurance is an excellent way to save money. Once you have a significant car-related expense, you can rely on your insurance policy to give you the funds you need.

However, if you are strapped for cash now, you may not be able to afford all of the above coverages. Each coverage you add to your policy increases your monthly premium slightly.

As a result, we recommend considering your budget in relation to what coverage options are important to you. If you can afford the premium now, including as much coverage as possible could be worthwhile.

Your Health Insurance

If you don’t have health insurance, you may want to increase your coverage for personal injury protections. This coverage option can ensure that you have enough funds to pay for medical treatments resulting from an accident.

Your Driving Habits

You should also consider your driving habits. If you have a long commute to work each day, you may be more at risk of an accident may be elevated. Additionally, if traffic is dense in your city, your accident risk may also increase. In these cases, you may want to have higher coverage limits to ensure that you are protected during an accident.

When you work with our Encore Insurance team, you can feel confident that your car insurance policy will include all of the coverage you need and none you don’t. Contact us today at 248-466-0200 to schedule your consultation.