Clovered's COVID-19 Response
  • Auto
  • /
  • How Much Auto Insurance Do I Need?

How Much Auto Insurance Do I Need?

By Teri Dormer

1.9K
0

Unlike certain types of insurance coverage, you don’t really have a choice when it comes to whether or not to invest in auto insurance. Legally required in 49 states (with the exception of New Hampshire, where drivers are only required to prove they can pay for liable costs), the basic aspects of your auto insurance policy are mandated by law.

But the rest of your policy is still largely up to you. How much coverage you want, how high your deductible will be, and what kinds of accidents your car insurance company will cover are almost entirely up to you.

Your state may have its own minimum coverage requirements, but is that really enough? Take a look as we break down the different features associated with car insurance, and how much you can expect your coverage to impact your car insurance rates.

The Different Car Insurance Policies

Like your homeowners insurance or even your health insurance in some cases, your car insurance is really a collection of different policies that combine to protect you, people in your car, and people you encounter on the road during an accident.

Certain policies are mandatory everywhere, while others may be required in some capacity based on where you live. Most car insurance companies will help you understand your minimum requirements so you can decide what you may need to add on.

  • Bodily Injury Liability (BIL): This policy covers any medical expenses for people involved in a crash for which you are at fault.
  • Personal Injury Protection: Covers your medical expenses and the care of anyone else involved in a crash with you when you are at fault.
  • Uninsured/Underinsured Motorist Coverage: Helps provide protection in case you’re involved in a wreck with an uninsured driver or someone with very limited coverage.
  • Collision Coverage: This policy covers any potential repairs to your vehicle after a crash.
  • Property Damage Liability: This plan covers damage to any vehicles involved in an accident of which you are at fault.
  • Comprehensive Coverage: If your car is ever damaged (not involving an accident) or stolen, comprehensive coverage offers you protection towards having it replaced.

In most states, you can expect the minimum amount of car insurance coverage to be written in numbers and look something like this: XX/XX/XX.

Each figure in the sequence determines the exact amount of coverage you’re required to have for bodily injury liability maximum for one person, bodily injury liability for all people in an accident, and property damage liability during an accident, in that order.

So, How Much Auto Insurance Do I Need?

In deciding on the other forms of coverage, it’s possible to have either too much or too little coverage. If you’re focused entirely on your car insurance rates, you might opt for minimum coverage without considering all of your options.

Raise your deductible too high in an attempt to lower your monthly premium and the out-of-pocket expenses to have your car repaired or to seek care could be exorbitant. It is often recommended to pick the lowest deductible you can afford.

Additionally, if you maintain valuable assets (like a house or a small business) that can be seized to cover expenses beyond your coverage, state-minimums may not be sufficient for your needs.

In contrast, if you have too much coverage, you could be paying too much every month for your car insurance premium or become a victim of unnecessary lawsuits. For example, if you have high-quality health insurance, personal injury protection may be an unnecessary add-on.

Get a Quote Compare multiple policies to get the coverage you need at the price you want.

Subscribe

Sign up for our newsletter to get the latest updates.
Please enter email address.
Invalid Email Address.