The answer to this question starts with your state's mandatory
insurance laws. All but one state has set minimum requirements as a
precondition of you driving on the public roads. No matter whether this
is an at-fault or a no-fault state, you are expected to be able to pay a
minimum amount towards the cost of making good the losses flowing from
an accident. It's possible this minimum amount may be enough cover.
The most common form of law applied to traffic accidents is
negligence. It identifies the driver who is the most immediate cause of
the damage and orders him or her to pay damages. It's quite expensive to
start a court case and fees are payable at each procedural step on the
way to a judgment. Because of these costs, it's uneconomic to sue
someone who has no assets, no savings, and no pay worth garnishing. If
you do not have assets to protect, there is less pressure to buy more
than the minimum liability coverage.
You may, however, think it worth protecting the value of your own
vehicle. But if you have assets and those injured in an accident might
think it worth suing you, you should definitely buy more than the
minimum cover. At the very least, you should buy enough to protect the
value of the assets you already have. The more pessimistic you are about
the risk of a claim, the more liability cover you should buy.
To keep the cost as low as possible, you need to think about the
amount of the deductible you agree to autory. The idea is for you to pay
for all the smaller repairs to your own vehicle out of your own pocket.
That gives the best value for money if you are really unlucky and cause
a great deal of loss and damage. Cheap auto insurance is all about
balancing risks against what you can afford. The higher your net worth,
the greater the need for a high amount of liability cover. So look
honestly at your financial situation and decide how much you are at risk
of losing should there be a claim. A deductible of, say, $1,000 may
give you more affordable annual premium rates. Remember the auto
insurance policy will not pay out until you have paid up the amount of
the deductible. So always ensure you have access to enough money to
cover the deductible. Follow these simple tips and you should find the
right level of cover for your cheap auto insurance.
