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How Much Car Insurance Do You Need?

Think of car insurance as an assortment of policies that cover different things. This can include liability for injuries to others, to yourself, to others’ automobile and to yours. Basically, you have a menu from which to make your selections.

So how do you know which pieces of coverage to choose? There are a lot of variables to consider before you buy. Keep in mind that most states require you to own car insurance. Check out the bottom of this page and click on your states auto insurance guide and use that as a baseline.

Types of Coverage

Here is an overview of auto insurance types:

  • Liability – If you get into an accident that is your fault, this policy helps cover expenses incurred by the people you hit.
  • Bodily Injury Liability – When you’re at fault this policy covers the medical expenses of those who are injured.
  • Personal Injury Protection – This covers medical expenses for you and your passengers. You may even be protected for time lost at work because of your injuries.
  • Property Damage Liability – Property damage liability insurance covers the damages to the other car when an accident is your fault.
  • Collision – After an accident, collision insurance will cover the costs of your car repairs.
  • Comprehensive – This policy covers costs if your car is stolen or sustains non-accident damage.
  • Uninsured and Underinsured Motorist – If you’re hit by a driver who doesn’t have car insurance, this coverage will help cover your costs.
  • No Fault – A few states require you to have a no-fault insurance policy, which provides coverage regardless of which driver is at fault. It limits law suits you can lodge against other drivers.

How Much Coverage You Should Get

You will need to get the minimum coverage called for by the state in which you live. Generally, if you can afford it, get more coverage than the minimal that’s available or required.

Generally, you’ll want to get the best amount of coverage for you at a price that you can afford, balanced out by how much you would be able to afford out-of-pocket for damage costs beyond how much your insurance will pay. If you have a lot to lose in terms of assets, you probably want to protect yourself with more coverage.

For example, if you’re at fault in a serious accident and your policy only covers the others’ medical expenses up to $15,000, can you afford to pay the difference if the expenses are twice what you’re covered for? This is the kind of situation many choose to be prepared for by having coverage that costs more than the minimum.

To learn more about auto insurance costs, read related articles: How Much Will Your Car Insurance Cost?, What Happens If You Don’t Have Enough Auto Insurance? and 8 Simple Ways to Save You 90% On Your Car Insurance.

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Insurance Reference Guides

Where you live may affect your coverage options. Our reference guide will assist you in findoing plans available in your state.

Insurance Terms Glossary

From "absolute liability" to "written premiums," we've done the work for you to define commonly used insurance terms.

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