Many drivers automatically renew their annual car insurance coverage without giving much thought to a very important question: Do you have enough auto insurance? Without careful analysis of your current situation, the age and value of your vehicle, and other factors, however, you could either be carrying too much or not enough auto insurance.

How do you know what’s enough, and what’s not? Here are some recommendations.

Collision Insurance

If you have an accident, collision insurance takes care of the cost of damage to your vehicle (after your deductible is met). If you still owe money on your car, your lender most likely requires that you carry collision coverage. Let’s say you own your car outright. You’ll still be wise to carry collision coverage to help you make repairs or get back some of its value if it’s totaled in an accident.

Collision coverage is probably the most costly part of your annual insurance premium.

On the other hand, if your car is free and clear and it’s old enough and has little cash value, you might consider reducing your premium by either raising your deductible or dropping collision coverage completely. The standard collision deductible is $500, but you can raise it to $1,000 or more, depending on your insurance carrier.

Comprehensive Coverage

While collision insurance pays for damage to your vehicle when you run into another vehicle or object, comprehensive coverage takes care of damage not the result of a traffic accident. Comprehensive coverage provides for damage due to things like fire, theft and vandalism.

Again, if you finance your car, your lender may require that you carry a certain level of comprehensive insurance.

Liability Insurance

Besides collision coverage, you definitely want to ensure that you take a good look at whether you have enough liability insurance. Why? Insurance experts say that the biggest risk you take getting behind the wheel is the potential damage that you could cause to another driver’s health or property.

How much is enough liability insurance? You’ll want to obtain at least $100,000 bodily injury liability coverage per person and $300,000 total. That’s because personal injuries are usually the most expensive part of an accident.

In addition, you should go for at least $50,000 in property damage coverage.

State Required Minimums Are Rarely Enough

Recognize that all states require motorists to carry a minimum amount of liability coverage. But if you only have the minimum coverage, this gap can leave you more likely to be targeted by lawsuits if you do become involved in a serious accident.

Personal Injury Protection

One portion of your auto insurance coverage that you might not need is personal injury protection. This is coverage that takes care of your injury-related expenses, health care, loss of income while you’re recovering from your injuries, and child care expenses. If you already have good health and disability insurance from your employer, you may not need personal injury protection coverage as part of your auto insurance policy.

Bottom line: It never makes sense to pay more for insurance than you need to, but if you don’t have enough and you need it, it’s too late to do anything about it. Take the time now to do a thorough analysis of your current coverage and make any necessary adjustments. You might also want to compare coverage with other insurance companies, and always ask for every available discount for which you may qualify.

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