The average driver will have three to four automobile accidents in their lifetime.
If you haven’t had one yet, it’s not a matter of if, but of when.
Auto accidents can be very costly when injuries involved are involved. The soaring costs of medical care can mean a big hit to your peace of mind and your financial health.
Choosing the right automobile insurance for your budget, stage of life, and other factors can give you financial peace of mind.
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Insurance of any kind is designed to provide you with financial security to face any problem that is just part of life.
When considering any insurance policy, you should consider your age (stage of life), budget, and state laws.
Every state draws these minimums based partially on the realities of car accidents in that state. According to Reasonover Law accident attorney, 48,500 car accidents resulted in personal injuries and over 1,000 deaths in Tennessee.
Depending on where you live, there are minimums that you have to meet in terms of coverage. You need to at least meet this minimum, regardless of age or budget.
The three most common types of insurance are:
1. Liability car insurance: Offers two-part coverage to the other party (third-party coverage)- their medical bills and vehicle repairs. It does not offer coverage for you, your vehicle, or your passengers.
2. Collision car insurance: Usually purchased along with comprehensive car insurance, this covers the replacement or repair of your own vehicle. It also covers collision with an object, such as a tree, or a car accident with no object (such as a car flip), along with accident-related damage.
3. Comprehensive car insurance: Optional insurance plan protects your car from certain damage not related to an accident, such as theft or natural disaster. Since it doesn’t cover accident-related damage, it’s usually combined with collision car insurance. Together they function as full cover insurance, the highest level of coverage a person can have.
When reviewing insurance options, you’ll want to consider how much cover you reasonably need based on your personal circumstances.
Generally, the amount of protection you need increases with age. A 16-year-old new driver will not usually have dependents or an expensive car to cover. They will also be able to recover more quickly from financial or health hits.
A younger driver might be fine with just basic car coverage that will cover the effects of negligent driving and other mishaps common among inexperienced drivers.
An older, more experienced driver may need more coverage to protect themselves, their dependents, and financial health, as they have less time to recover and make up for the damage.
An oft-overlooked part of financial planning is considering the long-term effects of not investing in proper coverage.
Planning for the unplannable and created a buffer for yourself is vital to having sustainable financial health in the long term. Should an accident happen in the next year, how would that impact my budget?
When budgeting for your insurance plan, first determine how much you actually need based on your current savings, health insurance coverage, and needs.
If you have low savings and little health insurance, paying for more coverage may save you more in the long run when an unexpected accident occurs.
When an accident happens, automobile insurance helps you face it without fear of being financially wiped out.
Check out our articles to arm yourself with solutions to other areas of life.
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