How much car insurance coverage do I need?
Your state requires every driver to carry minimum levels of insurance, and this will influence how much car insurance coverage you need. Each state’s laws will vary so make sure that you find out which types of auto insurance you need and how much that coverage will cost. Enter your ZIP code below to start comparing insurance quotes from local companies for free.
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UPDATED: Oct 31, 2020
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You probably came here looking for a specific amount of insurance that you should buy, but it’s not quite that easy.
Since everyone has a different car, driving history, driving habits and lives in differnet areas so there is no one-size-fits-all answer. Check out what your car insurance quote will be by entering in your ZIP code into the search tool!
These are some of the factors that will help you determine how much auto insurance coverage you need. They also play a role into the cost of your premiums as do your gender, age, marital status and credit history and score. Knowing these factors, get started and get FREE car insurance quotes!
Having car insurance, and enough of it, is very important to you and for the well being of others, if you should be found at fault for an accident. You’ll need to do a little reading to understand the two questions that you need to answer which will help you come to a conclusion as to how much car insurance coverage you need.
Question 1: What Coverage Does Your State Require?
The most important thing you need to know is how much insurance you are required, by your state law, to have on you and your car. Each state’s laws vary so make sure that you check out your state’s website to find out which types of insurance you need and how much coverage you must have.
Question 2: What Coverage Do You Want or Need?
Once you know what the bare minimums are for the type and amount of car insurance that your state requires, you need to do a little more thinking and planning before you can make a final decision.
If you are just driving an old beater, chances are you will be okay with the minimum amount of collision and comprehensive insurance, assuming your state requires it. If your state doesn’t require it, you could opt to go without it, to save on premiums, if you’ll be able to afford the costs to replace or repair your car in the event of an accident or damage.
If you own a new or rather expensive vehicle, which is worth several thousands of dollars, then you’ll probably want to have more collision and comprehensive insurance since repairs and replacements will take up a larger amount of money from your bank account.
A good rule of thumb is to double the minimum amount of insurance coverage required by your state, especially when it comes to property insurance.
Does your state have a high percentage of uninsured or under-insured drivers? You can get statistics on this from your state’s department of insurance. Such people either carry no insurance or as little as they think they can get away with.
If you find yourself in the unfortunate situation of being involved in an accident with them, you might need to use your coverage. This is especially true in a tort state, where one of the parties must be found at fault for the accident so that the victim can collect damages from the insurance company.
Types of Car Insurance
There are many kinds of coverage included in a car insurance policy. Here’s a breakdown of the different kinds of coverage that you may need or want to consider purchasing and why they are useful.
Liability– This insurance is to cover the costs associated with an accident where you are deemed to be at fault. The money is used to compensate the other party involved, but not those in your vehicle.
Property Damage Liability– If you are found at fault, this coverage will pay for any damages done to the property, such as the car, of the other driver or parties which are involved.
Bodily Injury Liability– BIL insurance covers the medical costs of those who are injured in an accident in which you are found at fault. It is often listed in terms of numbers such as 20/50 which means that your insurance policy will pay up to $20,000 per person with a maximum amount of $50,000 for all involved.
Personal Injury Protection– Also referred to as PIP, this will cover the medical costs for you and the people in your car. You may already be covered through your regular health insurance policy. This might also cover lost wages if you are out of work due to injuries.
Uninsured/Under-Insuraed Motorist Coverage– While many people feel they shouldn’t have to purchase such coverage, if you live in an area with a high rate of uninsured drivers, you’ll probably want to err on the side of caution and get some coverage. This will protect you, your passengers and vehicle if you get hit by an uninsured driver.
Collision– If you have collision coverage, your insurance, once you meet the deductible, will cover repairs after an accident.
Comprehensive– This kind of insurance will take care of damages done to your car if it is stolen or vandalized, but not in an accident.
Why Not Settle for the Lowest Amount of Coverage?
While choosing to purchase the bare minimum amount of car insurance coverage required is not wrong, it is not wise. Extra insurance isn’t very expensive and it’s a great way to protect your assets should the costs of an accident exceed your coverage limits. A rule of thumb on how much extra insurance to buy, is to make sure that you are covered for an amount equal to the value of your assets, the things you have which maintain or appreciate in value such as your home, collectibles, savings and investments.
Tip: Choose A High Deductible
By foregoing the standard $250 or $500 deductible you might want to consider a deductible of $2000 or more. Why? There are two main reasons.
First, it will save you money on your car insurance premiums. The less risk you pose to the insurer, by having a high deductible, the more likely they are to knock a few more percentage points off the costs of coverage.
Secondly, if you are wise and keep an emergency fund equal to the amount of your deductible, you’ll have no trouble paying for small expenses for which you might have otherwise filed a claim. Each time you file a claim, you up your car insurance rates.
Comparing Car Insurance Coverage
Now that you know more about the different types of coverage offered, you should make sure to find out how much you need and then adjust that amount upwards based on your situation.
- Comparing car insurance is simple. Just type in your zip code and choose from among the companies you want to compare.
- Select at least 5-7 companies so that you can get a good idea of the different costs and policies offered.
- Read through the quotes and contact the company for more details if you have questions.
- Negotiate for discounts in order to lower your premiums.
- Sign the contract and be insured!
With the internet available 24/7, there’s no reason to put off until tomorrow what should be done today. Not only will you save more money by comparing car insurance and switching providers, you’ll also make sure that you are not among the uninsured motorists. Spend some time doing comparisons and you could save hundreds of dollars a year. Simply enter your ZIP code into the FREE tool below!