Dave Ramsey says these are the 3 most important types of auto insurance

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Every motorist should have the right car insurance coverage so that an accident or incident with a vehicle does not result in financial devastation. Determining the right coverage can be complicated as most insurers offer many different types of protection for conductors. For those who aren’t sure what auto insurance they need, personal finance expert Dave Ramsey offers some tips on what he believes to be the most important types of auto insurance.

1. Liability insurance

Liability insurance pays for losses suffered by other accident victims if the covered driver causes an accident. For example, if an insured causes an accident that injures other people and damages another vehicle, the liability insurer pays the victim to repair or replace the car and get medical attention.

As Ramsey explains, there are laws in almost every US state requiring liability insurance. But, he says, buying the minimum coverage required is not enough. Ramsey’s blog suggests getting a minimum of $500,000 in bodily injury and property damage protection.

Drivers who heed this advice can ensure that their assets are protected even in the most serious accidents. With minimal coverage alone, there is a very real possibility that a motorist will face personal losses.

2. Comprehensive insurance

Back to back insurance provides protection against financial loss, paying the policyholder when things go wrong. For example, this type of insurance would provide coverage if the insured’s car is stolen or damaged by fire or a falling tree branch. Ramsey recommends comprehensive coverage “to protect you from the vagaries of life.”

3. Collision Insurance

Finally, Ramsey says collision damage waiver is crucial. This type of auto insurance pays to repair or replace the policyholder’s vehicle. Without this type of coverage, if a driver is responsible for an accident, no other liability coverage would pay the bills, leaving the driver to pay for the repairs.

Although collision insurance can help a driver avoid paying to replace their car, Ramsey only recommends it in certain situations. He says drivers do not do need this type of coverage if they could easily pay cash to replace their car. If the car is reimbursed and the driver can replace it with the money saved, this type of protection may not be necessary.

While Ramsey also says it may be a good idea to purchase other insurance coverage, such as uninsured or underinsured coverage and rental car reimbursement, he says third party liability, comprehensive coverage and collision coverage are the “big three” and the most important types of protection. to buy.

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