How much auto insurance do you need?
The answer depends on several factors, including the state in which you live, the value of your vehicle, and how much liability insurance you can afford. You may require numerous types of insurance to protect yourself financially, but the following are general guidelines for how much car insurance is recommended.
How Much Auto Insurance Coverage Do You Require?
How much auto insurance you need versus how much is mandated are two entirely different questions. Before deciding how much auto insurance you need, it’s critical to understand how it works.
State requirements are commonly much less than what is required to safeguard your finances in the event of an accident. The best liability insurance for the majority of drivers is 100/300/100, or $100,000 per person, $300,000 per accident for bodily injury liability, and $100,000 per accident for property damage liability. You need to be completely protected if you cause significant damage in an at-fault accident.
You’ll also want comprehensive personal injury protection (PIP) coverage, uninsured motorist coverage, and other state-mandated coverages. Remember that you will be liable for any damage you cause in an accident, so having at least 100/300/100 liability coverage can protect your assets and future earnings.
Although comprehensive and collision coverage aren’t required by law, that doesn’t mean you shouldn’t have them. If you owe money on your vehicle, your lender may require comprehensive and collision coverage. Choosing between liability-only and full-coverage insurance can save you hundreds of dollars annually. Your lender might also require additional coverage, such as a gap or windshield coverage, to ensure their investment is protected.
These coverages are also beneficial if you can’t afford to replace your car if it’s totaled or if you can’t afford to pay for a major repair out of pocket. There are numerous ways in which your car can be damaged, so ensuring that you have coverage against any potential loss is a wise decision.
Common Types of Car Coverage
– Bodily Injury Liability
If you cause an accident and are found to be at fault, liability insurance will cover the other driver’s medical expenses. Each state has its minimum liability requirements, but it’s good to have bodily injury liability coverage of at least $100,000 per person and $300,000 per accident.
– Property Damage Liability
Liability insurance also covers damage to another person’s property if you are at fault in an accident. Although each state has minimum liability standards, you might want property damage liability coverage of at least $100,000.
– Collision
In cases where you are at fault for an accident, collision insurance will cover vehicle damage. If you owe money on your car, your lender might insist that you maintain collision coverage.
– Comprehensive
Comprehensive insurance covers the damage to your car that’s not the result of an accident. This comprehensive insurance coverage covers weather, theft, fire damage, etc.
