5 Tips for Insuring the Family Car

While car insurance does not give physical protection to you and your family, it does offer significant financial protection. Often in automobile accidents, the cost of the car repair or replacement pales in comparison to the medical and other liability costs. Without proper car insurance, some families will find it nearly impossible to replace the car that provides the transportation to and from the workplace. This can produce even greater financial hardship.

Buy insurance to protect every driver of every vehicle.

Trying to slip young drivers past the insurance company without adding them to the policy can leave you uninsured. Car insurance policies routinely list the minimum age driver for the vehicles. If you do not specify underage drivers, 26 normally is the youngest driver allowed. A young driver having an accident in your vehicle will not be covered on this type of policy. You will be responsible for all of the loss involved on both sides of the accident. The easy way to avoid this is to be honest with the insurer and pay the correct premium for the coverage that you need.

Your personal vehicle needs to be protected unless you can afford to replace it without a major sacrifice.

Most family cars are valued between a couple of thousand and tens of thousands of dollars. Replacing them can be painful if you have to pay the full amount. If your car is financed, the financial institution will require collision insurance as part of the loan agreement. You should at least carry collision insurance as long as your car has debt attached to it. The only thing worse than having to replace a car without insurance is to have to pay off the old car while trying to buy another one. Collision insurance will protect you from this possibility.

The law requires you to buy liability protection on your car.

While the law does not necessarily care about your personal financial well-being, it does care that you can adequately compensate others for a loss that is your fault. Liability insurance will cover both needs. This is the part of your car insurance that takes pays for the medical bills, pain and suffering, and property loss of people involved but not at fault in the accident.

Liability insurance can be purchased to cover minimal amounts to satisfy the legal requirements.

If the cost of car insurance is a financial hardship by itself, you can buy the least amount required by law. However, if you have assets that are at risk in the event of a lawsuit, you may want to reconsider only buying the minimum. These amounts may seem huge when you see figures above $100,000 listed on your policy. However, this type of money can be burned off quickly with huge hospital bills and large court settlements. Amounts less than $250,000 may not be adequate to cover your home equity or retirement accounts.

Always make sure that you carry enough liability to exceed the value of your existing assets.

If you do not want to face financial ruin after an accident, you need enough liability insurance to pay for claims intended to exhaust your future income and current assets. Since many people do not review their car insurance regularly, you should consider buying about 25% more insurance than your assets to protect you as your assets grow.