Choosing Coverage Limits For Privately-Owned And Rented Cars: How Much Coverage Do You Need?

June 1, 2022

Assessing the volume of coverage you need can be complicated. In most cases, you need to combine the coverage required by law and the one you think will safeguard you and your assets. Apart from that, you also need to pick the best insurance plan.

While the typical auto insurance coverage might be sufficient for some drivers, others might consider it insufficient. Therefore, requesting quotes from only one insurance provider might take out more coverage than needed and higher rates. To determine the exact amount of coverage, you need to evaluate your financial situation, the state of your vehicle, driving habits, and your location. Above all, though, you have to understand your insurance options.

How To Determine What Exact Coverage You Need?

Lack of experience in insurance shopping may lead to confusion and a mistaken belief that every coverage is worth considering and purchasing. However, only a handful of options can accurately suit your needs. And they will likely be offered as a bundle under one insurance policy.

So, why do you have to choose out of so many options? The wide range of insurance offers is designed to cover you and your vehicle in specific scenarios. Depending on the frequency of rides and your driving habits, you can be sure that some of the scenarios might never occur.

Creating only one or two policies that include every possible risk and outcome will result in mind-blowing pricing and, therefore, low demand. Handpicking the coverage allows drivers to meet the minimum state requirements or afford some of the extra elements and, as a result, get just the right policy.

When Is It Appropriate To Take Out Rental Car Insurance?

The rental car policy is a perfect choice for drivers who do not own a car at the moment or need a temporary replacement for the old car that is in for a tune-up or repair. However, you should bear in mind that the companies typically offer over-the-counter insurance policies along with rental vehicles. And these policies might conflict with the ones you already have or duplicate them. Therefore, it is crucial to double-check if your current coverage extends to the rental vehicle. There is no need to take out an additional policy if it does.

Identifying The Right Insurance Offer For Your Own Car

Naturally, every driver had to choose between the most common types of auto insurance at least once. And while collision and comprehensive coverage are not typically mandatory (unless you lease or loan a vehicle), they offer competitive terms.

With collision coverage, your vehicle is protected should a road accident occur, and just like liability insurance, it has specific policy limits. This type of coverage implies premium payments and deductibles. On the bright side, you can pick the deductible but keep in mind that the lower it is, the higher are the premium payments.

It is crucial to understand when to cancel collision insurance and downsize the costs. One of the main reasons to drop this coverage is based on the frequency of rides. Thus, you might be paying for the coverage you do not need.

Another reason to drop it is the financial strain or, more precisely, its absence. If you can afford to fix your automobile after an accident or replace it, there is no adequate reason to keep the coverage. Finally, collision insurance on an old car translates into overpaying due to the car’s diminished value.

If this is your first time dealing with auto insurance, you also need to learn about liability coverage, as it may come in handy if you cause an auto accident or an injury. Depending on the state, this coverage can be required. But keep in mind that there are two types of liability coverage designed for different scenarios: bodily injury and property damage.

Comprehensive insurance is the most popular insurance option, as it remains one of the standard auto insurance coverage recommendations. This coverage offers protection to the vehicle when it is damaged by anything other than a collision. In this case, you also need to choose the deductible.

The Intricacies Of Full Coverage

First, the type of coverage is often a combination of liability and sometimes only comprehensive or collision insurance. While it is common to compare insurance offers and combine two basic types of coverage, some drivers combine all three options. Naturally, buying full coverage results in substantial costs. Every driver should understand when it is sensible to drop some of the policy elements or even all. So, when should you drop full coverage on your car?

Downsizing your costs and affording the risk of dropping full coverage can be a tricky business. One of the main reasons to give it up is the age of your automobile and its replacement value. The auto’s mileage can be another relevant motivation to consider downsizing to more substantive auto coverage. In this case, the high mileage of the car and its age can result in over-insurance. In other words, you can end up significantly overpaying.

At some point, it all comes down to the total coverage cost. If your financial situation allows you to keep full coverage, it is only up to you. However, to avoid financial hardship in the future, consider assessing your insurance policy and balancing the costs.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.


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