How Much Car Insurance Do You Really Need in 2022? State by State

In most states, the minimum requirement for car insurance is $50,000 in bodily injury liability coverage and $25,000 in property damage liability coverage. However, some states also mandate uninsured motorist coverage and PIP or MedPay. It’s a good idea to supplement your state-required coverage with additional insurance that aligns with your net worth. This might involve increasing your liability limits and adding optional types of coverage like collision and comprehensive insurance.

Car Insurance Requirements by State

Let’s take a look at the car insurance requirements for each state as of January 2022.

Reading: How much car insurance coverage do i really need

Types of Car Insurance Coverage

When it comes to car insurance, there are several types of coverage to consider. Let’s explore each one:

Civil Liability Insurance

Civil liability insurance includes bodily injury liability and property damage liability coverage. It pays for the expenses of the other driver if you cause an accident and may also cover your legal costs if you get sued.

• Do I need it? Yes, liability insurance is mandatory in most states.
• Tip: Make sure you have enough liability insurance to protect your assets.

Personal Injury Protection (PIP)

PIP covers medical costs for you and your passengers after an accident, regardless of who is at fault. It can also help with other accident-related expenses like lost wages and child care.

• Do I need it? You need PIP if you live in one of the 12 states that require it.
• Tip: Even if it’s optional in your state, PIP is worth considering as it covers your passengers and has a lower deductible compared to most health insurance plans.

Medical Expenses (MedPay)

MedPay is similar to PIP and covers medical costs for you and your passengers after an accident. While it doesn’t cover lost wages, it can be used regardless of who is at fault. However, it typically has lower policy limits compared to PIP.

• Do I need it? Yes, MedPay is required if you live in Maine or New Hampshire.
• Tip: Even if it’s not mandatory, MedPay is a smart investment. It’s affordable and can help cover PIP and health insurance deductibles. The minimum coverage is usually enough for most people with existing health insurance.

Uninsured/Underinsured (UM/UIM) Driver Coverage

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Uninsured or underinsured motorist coverage protects you if you’re involved in an accident with an uninsured driver, a hit-and-run situation, or someone who doesn’t have enough coverage to pay for all the damages.

• Do I need it? Uninsured motorist coverage is required in twenty states and the District of Columbia, while underinsured motorist insurance is mandatory in fourteen states.
• Tip: Since it’s reasonably priced and comes in handy, consider adding uninsured/underinsured motorist coverage to your policy, even if it’s not legally required in your state.

Collision Insurance

Collision insurance covers the costs of repairing your vehicle after an accident. It also comes with a deductible, which is the amount you must pay out of pocket before the insurance kicks in. Keep in mind that lower deductibles mean higher premiums.

• Do I need it? If your car is leased or financed, collision insurance may be required.
• Tip: Even if it’s not obligatory, collision insurance is a wise investment for those who can’t afford to replace or repair their vehicles independently after an accident. It’s also recommended for frequent drivers, those in high-traffic areas, and individuals who prefer not to drain their savings on car repairs or a replacement vehicle.

All Risk Insurance

Comprehensive coverage, also known as all-risk insurance, protects your car against damage other than collisions. It covers issues like vandalism, theft, weather-related damages, and wildlife collisions. Similar to collision insurance, you’ll need to choose a deductible.

• Do I need it? If your car is leased or financed, comprehensive insurance may be required.
• Tip: Even if it’s not mandatory, comprehensive insurance provides valuable protection, especially if you can’t afford to replace your car out of pocket. It’s crucial for those in areas with higher rates of theft or vandalism and ensures you won’t deplete your savings in case of severe car damage.

Guaranteed Auto/Asset Protection (GAP) Insurance

GAP insurance is essential if you have a loan or lease for your car. It covers the difference between the amount you owe on the loan/lease and the actual value of the car in case of total loss.

• Do I need it? If your car is leased or financed, GAP insurance may be required.
• Tip: If you owe more on your loan or lease than your car’s value, getting GAP insurance is a smart move.

Emergency Roadside Assistance

Emergency roadside assistance comes to the rescue when you encounter issues like getting locked out of your car, needing a tow or jump start, having a flat tire, or running out of gas. This coverage provides peace of mind and ensures you won’t be stranded in an emergency.

• Do I need it? No, roadside assistance is not necessary, but it’s worth considering.
• Tip: If you’re concerned about your vehicle’s reliability or frequently embark on long trips, roadside assistance is a great way to stay prepared and avoid getting stranded.

Mechanical Breakdown Insurance (MBI)

MBI covers the costs of repairs for mechanical parts and systems, such as the engine, transmission, and power system. It functions similarly to extended warranties and service contracts, but instead of a lump sum upfront payment, you pay a monthly premium. MBI also covers more vehicle systems than most extended warranties.

• Do I need it? No, MBI is not required, but it’s worth considering.
• Tip: If you own a new car that you plan to keep for a while, MBI is a relatively inexpensive way to protect your vehicle from potential failures.

Windshield Insurance/Full Glass Coverage

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If you lack comprehensive or collision insurance that covers a damaged windshield, you can opt for windshield insurance. Keep in mind that a standard liability insurance plan won’t cover your windshield repairs or replacement unless the accident is not your fault.

• Do I need it? No, windshield insurance and full glass coverage are not required.
• Tip: If you don’t have collision or comprehensive coverage, windshield insurance is a convenient way to ensure affordable repairs or replacement, whether it’s due to an accident or a pebble causing a crack while driving.

Consequences of Driving Without Car Insurance

Driving without the minimum auto insurance coverage comes with significant risks and can have transformative consequences. If you’re pulled over by law enforcement and don’t have insurance, you could face fines, license and registration suspensions, and costly surcharges on your insurance premiums. In the event of an accident, uninsured or underinsured individuals may have to pay thousands of dollars out of pocket for property damage and medical bills. Failure to pay could result in wage garnishment and asset seizure.

Even sticking with the bare minimum can be a risky choice since insurance only pays up to the coverage limits. Thus, the recommended auto insurance coverage varies based on your net worth.

Video: How Much Car Insurance Do I Need?

Check out this informative video that answers the question of how much car insurance you need.

Ask the Experts

To provide further insights, WalletHub asked a panel of experts some key questions regarding car insurance:

1. Why do different states have such different car insurance requirements?
2. Should drivers buy more coverage than the state minimum?
3. What types of auto insurance coverage should non-mandatory drivers consider?

Feel free to click on the experts below to learn more about their expertise and read their answers to these important questions.

Remember, choosing the right car insurance coverage is crucial for protecting yourself and your assets. Take the time to evaluate your needs, consider your financial situation, and make an informed decision.

Source: https://amajon.asia
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