# Coverage Recommendations Decision Framework

## Liability (BI/PD)

| Total Assets | Risk Tolerance | Recommended Liability |
|-------------|---------------|----------------------|
| > $500K | Any | 250/500/100 + umbrella policy ($1M+) |
| $200K-$500K | Any | 250/500/100 |
| $50K-$200K | Conservative/Moderate | 100/300/100 |
| < $50K | Aggressive | 50/100/50 (carries risk) |
| < $50K | Conservative/Moderate | 100/300/100 |

**Rule**: Liability should cover at least your total net worth.

## Collision Coverage

| Condition | Recommendation |
|-----------|---------------|
| Has car loan | **Required by lender** — $500 deductible |
| Vehicle value > $15K, no loan | Yes — $500 deductible (moderate risk) or $1,000 (aggressive) |
| Vehicle value $5K-$15K | $1,000 deductible (moderate) or consider dropping (aggressive) |
| Vehicle value < $5K | Consider dropping — annual premium may exceed 10% of vehicle value |

**Rule of thumb**: Drop collision when annual collision premium > 10% of vehicle value.

## Comprehensive Coverage

| Condition | Recommendation |
|-----------|---------------|
| Has car loan | **Required by lender** — $250-$500 deductible |
| Vehicle value > $10K | $250-$500 deductible |
| Vehicle value $4K-$10K | $500 deductible — keep even on older cars (covers theft, hail, deer) |
| Vehicle value < $4K | Optional — evaluate if annual premium exceeds 10% of car value |

**Note**: Comprehensive is relatively cheap and covers uncontrollable risks. Often worth keeping even when dropping collision.

## Uninsured/Underinsured Motorist (UM/UIM)

**Always recommended. Match your liability limits.**

~14% of US drivers are uninsured. This is one of the most important coverages — protects you when the other driver can't pay.

## Gap Insurance

| Condition | Recommendation |
|-----------|---------------|
| Has car loan + vehicle ≤ 3 years old | **Strongly recommended** — new cars depreciate 20-30% in first 2 years |
| No loan | Not needed |
| Loan + vehicle > 3 years old | Usually not needed (depreciation has stabilized) |

## PIP / Medical Payments

- **In PIP-required states**: Meet state minimum; consider higher limits if lacking health insurance
- **In other states**: Add MedPay $5,000-$10,000 (income < $75K) or $10,000-$25,000 (income > $75K)
- Covers medical expenses for you and passengers regardless of fault
- Helpful even with health insurance to cover deductibles and copays

## Rental Reimbursement

**Recommended**: $30-$50/day, 30-day max

Very cheap add-on (~$20-$40/year). Worth it if you depend on your car and don't have a backup vehicle.

## Roadside Assistance

**Optional** — compare with AAA membership

Usually $10-$30/year through insurer. Compare with AAA ($60-$120/year but includes other benefits). Many new cars include this from the manufacturer.

## Rules of Thumb Summary

1. Drop collision/comprehensive when annual premium > 10% of vehicle value
2. Liability should cover at least your total net worth
3. **Never skip UM/UIM coverage** — it protects YOU
4. Higher deductibles = lower premiums, but make sure you can afford the deductible
5. If you have a car loan, your lender sets minimum coverage requirements — check your loan agreement