How much car insurance I need?
This is a common yet complex question. Prudence would suggest carrying the maximum amount of auto insurance that your budget allows. Yet doing so may result in unnecessary expense. Frugality would suggest carrying only the minimum car insurance required by your state, but this may leave you without critical coverage in the event of an accident. Before choosing the right amount of coverage, it is first important to look at your state’s minimum auto insurance requirements. Laws vary by state, so it is important to know the regulations that govern your area. Review the information in this site to learn the exact minimums for your state. It is also helpful to understand the various types of auto insurance available and how they function.
Body Injury Liability
Compensates you (the driver) and your passengers in the event of injury resulting from an auto accident. Most states require this type of coverage. How much car insurance you need depends on your net worth and the assets you want to protect from a possible lawsuit following an accident.
Property Damage Liability
Covers any repairs or replacement to the other driver’s car or property resulting from an accident. Most states at least $5000 in coverage, but in a severe accident, this amount is quickly exceeded. So you may want to consider carrying more of this type of protection.
Personal Injury Protection
Pays your medical and/or funeral expenses associated with an accident. If you have solid health insurance coverage, you may choose to fore go this type of insurance.
Uninsured or Under insured Motorist coverage protects you if the other drive in an accident does not have sufficient coverage. Because it is inexpensive, and given the high number of uninsured motorists , it is well worth the cost.
Collision and Comprehensive…
Collision reimburses you for damage to your vehicle in an accident, while comprehensive offers protection tin the event of natural disaster or vandalism. These types of insurance are meant to protect against major rather than minor losses, so it is best to carry a high deductible.
Other critical factors that affect your choice of car insurance policy include:
- The type, age, and reliability of your vehicle
- Whether you rent or own your residence
- The value of your residence (if you own)
- The value of your assets you’d like to protect
- How many family members under 18 years of age drive your vehicle
- What type of health insurance you and your family members carry
- Whether you live in an area where auto theft is common
- Whether you live in an area that experiences severe weather
For help choosing the most appropriate car insurance for your needs, visit visit our Auto Insurance Articles section