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Auto Insurance in Massachusetts: How Much Should You Buy?

Auto Insurance New BedfordWhen it comes time to purchase an auto insurance policy, your first instinct might be to try and save as much money as possible. Nobody wants a big monthly bill, but it is important to consider what type of policy you need rather than just trying to get away with low-cost coverage. On the other hand, some car owners love their new vehicle so much that they end up over-insuring it and paying way too much. You need to find a happy medium with affordable payments and a policy that will effectively cover you when you need it.

Why You Need Auto Insurance

There are a number of reasons why people get auto insurance. When you buy a new car, the lender will often require a fully-protected policy that covers above the state minimum. This type of policy will cover your investment and interests – as well as the lender’s – in the event that your vehicle is in an accident, is vandalized or gets stolen.

Liability insurance is a very basic part of auto insurance. It covers bodily injury to others and property damage of others if you are at fault in a collision.  One of the other basic parts of your policy is physical damage coverage to your own auto. This is called Collision and Comprehensive insurance. Together, these two coverage parts of your policy can insure against almost any damage that could happen to your auto except mechanical breakdown. 

Understanding State Minimum Requirements

Auto insurance rules differ greatly between each state, however liability insurance is generally required by state regulation to at least prove financial responsibility. Some states are little more relaxed, such as Virginia or Washington. Still, other states are even more strict, such as North Carolina which requires its citizens to purchase liability insurance before they even receive their driver’s license.

Talk with your New Bedford insurance agent for details about laws in Massachusetts regarding auto insurance policy requirements to ensure that you are properly insured. Your local agent can help you find the best policy for your particular situation.

How Auto Insurance Works

When you look at your insurance policy there are a lot of numbers and categories that can be confusing. For example, you will likely see some numbers, such as: 20/40/100. What does that mean? The first and second numbers deal with liability limits with regard to bodily injury to others and the third number deals with liability limits with regard to damage to other people’s property.

The numbers in our example would represent a policy that provides $20,000 for each person that is injured in a collision, $40,000 total allowed per accident and $100,000 is provided for property damage. If the total coverage is $40,000 per accident and four people are injured in the collision, requiring the maximum $20,000 per person, the policy may cover the first two people that submit a claim.  Or in a different scenario, split up the limit four ways with $10,000 to each.

The limits for these numbers as set in a minimum required state policy are often too low to cover all of the property damage and liability that can come with an at fault collision. This is why you need to know what you are getting when you sign up for an insurance policy and make sure that you are adequately insured in the event of an accident. A policy that is 250/500/200 might be more appropriate, with each injured person eligible to receive $250,000, $500,000 total for everyone that is injured and $200,000 to cover property damages.

Other Concerns

Other parts of your policy can be very important also, and not to be ignored. Parts such as Substitute Transportation when you lose use of your auto in the event of a covered loss.  Medical Payments for you and passengers can be very important if there is no health insurance to pay.  Do not ignore injury to you caused by another driver who either does not have enough liability insurance or has none at all. There are alot of drivers out there without insurance.  Therefore you should consider high limits for Uninsured and Underinsured motorists to protect you from them.

GAP INSURANCE

Lastly, if you finance the purchase of a new auto, you should be aware of the need for Gap Insurance. The auto policy almost always pays on an actual cash value basis. We all know when a new car drives off a dealers lot, depreciation occcurs immediately. If the total balance due on a auto loan for a new auto, exceeds the actual cash value of the auto at the time of a total-loss accident,  there results a “gap” or uncovered part of a claim that you would owe the lienholder. For this reason, Gap insurance is offered by auto dealers on new cars. You should check with your New Bedford insurance agent for Gap insurance – or a new car replacement guarantee at a much lower cost than offered by a dealership. The coverage can be included for very little extra on an auto policy with some insurance companies.

The best way to assess how much insurance you will need is to talk it over with your New Bedford insurance agent. Your agent can discuss your need for appropriate limits of coverage  that will help to protect you, your family and your property.

Which Policy is Right for You?

Some insurance companies will tell you that you need to get as much insurance as you can afford and then tell you that you can’t afford not to be fully insured. Unfortunately, household budgets and other issues can sometimes affect how much insurance we are able to reasonably afford.

It may be just as impractical to buy physical damage, Collision or Comprehensive on a 15 year old vehicle that you own outright as it is to skate on the state required minimums for your brand new sports car.  Ask about discounts for multi-car policies, homeowner policies, life insurance and more. Discuss your unique needs and situation with your New Bedford insurance agent. Your agent can help you create an insurance policy that meets or exceeds the requirements of the state, your lender and your own personal peace of mind.