How to Buy Car Insurance

> Liability: This is the portion of a policy that everyone needs—the part that protects you for damage caused to property (a vehicle or otherwise) or bodily injury or death to a person if you're at fault in an accident. Liability limits are measured in tens of thousands—or even hundreds of thousands—of dollars. Three figures typically are given, stating the maximum sums that could be paid out for a single incident. As an example, "50/100/25" means $50,000 bodily injury coverage for one person, $100,000 total coverage, and $25,000 for property damage. How much you need is a personal decision, but additional liability often doesn't cost a lot more. Many states have a specified minimum that all drivers are expected to have, but it's seldom an adequate sum. Drivers with assets to protect are encouraged to obtain a high-liability policy, to guard against financial disaster.


> Collision: This portion helps pay for damage to your own vehicle in an accident. Rates are based largely on vehicle type and age. As a rule, owners of older cars are better off without it, because payoffs are based on the car's "book" value (actual cash value), which is likely to be minimal. Late-model owners must also realize that the amount paid in a claim takes depreciation into account, so you can receive considerably less than the cost of a replacement vehicle.


> Comprehensive: Pays for physical damage that results from incidents other than collisions, including storms, vandalism and theft. Here too, paying for coverage on an older car may be wasteful.


> Uninsured/Underinsured Motorist: What if you're involved in an accident with a person who has no insurance, or whose policy pays only a pittance to the injured party? With this coverage, you're more likely to wind up with a realistic payout.


> Medical Payments: Covers medical treatment for bodily injury in an accident, for you and your vehicle's occupants. If you have adequate hospitalization insurance, this might not be necessary—but check your existing coverage before deciding.