Whether you’re buying a new car or considering a change in auto insurance, understanding your coverage options is essential to getting the type of coverage you need without overpaying or setting yourself up to pay a lot more than your monthly premium when the times comes for collision repairs.
Where to Start: Identify Your Needs
To determine what type of coverage will meet your requirements and ensure you are adequately covered, you need to think about your average vehicle usage. Think about:
How much do you drive and where are you doing most of your driving?
If you’ve got a long daily commute on the interstate, any accident damage that occurs is likely to be worse because of the average speed compared to someone who uses local roads with an average speed limit of 30 mph.
Who is driving your car?
If you’ve got teenagers or a loveable roommate without their own daily driver but a less-than-attractive driving record, you may need more coverage compared to an individual with no accidents or tickets in the last five years who knows no one else is driving their car.
Are other drivers in your area likely to be uninsured?
If you’re driving in New Mexico, more than 30% of the drivers on the road do not carry the minimum required insurance. That means even for accidents that are not your fault, your insurance may be picking up the tab (but only if you have the right policy…otherwise, it’s out of pocket).
Where is your car parked?
If your vehicle is parked in an area—either at home or work—that is at high-risk for break-ins, consider that when buying insurance so that theft and the cost of repairs for broken windows or locks are covered.
Answering these questions helps you better understand your needs so you can better identify the coverage you need to really be covered in the event of an accident.
Common Types of Auto Insurance Coverage
You have a good idea of how your average driving situation may affect your risk for an accident or break-in. So, what type of coverage does that translate to? Here are some options:
Liability-only Coverage – it covers just what you are liable for. In other words, it only applies if you are at-fault for an accident, and it only covers the other party’s property damage and/or medical expenses, likely not yours.
Collision Coverage – it covers only the cost of auto body repairs and other costs—like towing, car repair and medical expenses—associated with/resulting from an accident.
Perhaps the most critical piece of information to get before you buy auto insurance is
Comprehensive Coverage – it covers repairs and associated expenses resulting from something other than an auto accident, like a break-in or damage caused when a tree branch fell on your hood.
Gap Insurance – it covers the difference between what your vehicle’s value and what you still owe the bank if your car is declared a total loss.
Uninsured Motorist Insurance – it covers expenses that are not going to get covered by an at-fault driver because they don’t have any or enough insurance themselves. This type of coverage may also be applied for hit-and-run damage, which often happens when your car is parked in the street or dinged in a parking lot.
More Considerations for Your Insurance Coverage
Buying auto insurance is always a balancing act. You want adequate coverage, but not excessive coverage. To get the right level of coverage, consider:
- New Mexico’s minimum insurance requirements:
- $25,000 for bodily injury/death of one person
- $50,000 for bodily injury/death of two or more persons
- $10,000 for property damage in any one accident
- The age and current value of your car
- Monthly premium
- Deductible when filing a claim
Additionally, take into account your financial situation and assets. If you’re sued after an accident, the more coverage you have, the more you’ll be able to protect yourself.
At ABC Paint & Body, we’re not insurance experts. We recommend you talk to your insurance agent to help you better assess your coverage needs. We just want to make sure you have the right insurance so that if you need us for your collision repairs, your insurance company is footing the bill, not you.