How much auto insurance do I need?

The amount of auto insurance coverage you need is going to depend on your individual insurance needs. Some of the factors include your financial institution, how much you drive, what your car is valued at, and where you live. Pretty much all states have some sort of minimum auto insurance coverage requirements.

How to find out how much coverage you actually need;

What type of vehicle do you drive. Check what you’re covered for with annual collision coverage. If your auto insurance premium is 10% of the vehicles value, you may want to look into reducing coverage. If your car is used for your business, you may want to look into commercial auto insurance. 

What is the geographical location where the vehicle is located in. Depending on where you live or where the car is located may play a factor in how much coverage you need. If you live in an area with high theft rates, more coverage may be an option. If you live in an area that is safe for the most part, getting a more limited policy may work for you.

What type of assets do you have. The amount of coverage you need will tie into the amount of assets you have. The more assets you have, the more auto insurance coverage you should carry. You want to have enough liability auto insurance to cover the value of your assets.

How much liability auto insurance do I need to carry?

Most states set laws for minimum auto insurance liability coverage limits. You need to do your best in abiding by these laws and staying within the guidelines. There is always the chance you need more coverage than the state minimum. If this is the case for you, you should always look into covering yourself for the amount you think is necessary for your lifestyle.

Other types of auto insurance you may need;

Liability insurance covers you for the very basics,  but what if you need coverage for different scenarios? The good news is there is usually an insurance type to cover your particular risk. Below we go over a few of the more common examples;

Personal injury protection (PIP). A PIP will cover medical expenses for you and any of your passengers if you are involved in an accident. The 12 no-fault states require this type of car insurance coverage.

Medical expenses (MedPay). MedPay very much works the same as a PIP. It can be used for a claim regardless of whom is at fault. It will not cover lost wages and typically has lower policy limits than a PIP. 

Uninsured / Underinsured Motorist (UM/UIM). UM coverage will cover you if you are involved in an accident with an uninsured or underinsured driver. If you live in an area know to have drivers on the road without insurance, you may want to look into this coverage. 

Are there any optional auto insurance coverage types available?

Liability insurance isn’t designed to pay for your property damage. For this reason it’s always a good idea to look into coverage that will protect your car. If your vehicle is financed there’s a good chance you’re already required to carry additional coverage. Even if that isn’t the case, you should consider the following auto insurance coverage types;

Collision auto insurance coverage. Collision is designed to cover the cost of your vehicle if you are involved in an accident. Liability covers the other driver, collision covers you. Collision is set up like liability insurance. It has limits, deductibles and comes with a premium depending on the risk. 

Comprehensive car insurance coverage. If your vehicle encounters damage from something other than a car crash, you more than likely going to need comprehensive auto insurance coverage to have a claim. 

Guaranteed auto protection (GAP). Vehicles depreciate at a rapid pace. Very often we end up upside down on our auto loan. When you’re involved in an accident you are covered for the actual cash value in a standard policy. To cover the difference you need to carry GAP insurance.