How Much Auto Insurance Coverage Do I Need?

An auto insurance policy can include several different types of coverage. Your independent insurance agent will provide you with professional advice on the type and amount of auto insurance coverage you should have to meet your individual needs and comply with the laws of your state. These are the main types of coverage that your policy may include:

Bodily Injury Liability: The minimum bodily injury coverage varies by state and can be as low as $10,000 per person or $20,000 per accident. Many auto policies stop at a maximum of $300,000 or $500,000 per accident for liability coverage. If you injure someone with your car, you could be sued for a lot of money. The amount of liability coverage you have should be high enough to protect your assets in the event of an accident. most experts recommend a limit of at least $100,000/$300,000, but that may not be enough. this is no place for cheap auto insurance. If you own a million dollar home, you could lose it in court if your insurance coverage is insufficient. You can get additional coverage with personal coverage or a personal excess liability policy. The higher the value of your assets, the more you stand to lose, so you should purchase liability insurance appropriate to the value of your assets.

Reading: How much coverage do i need for auto insurance

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Property Damage Liability: The minimum you should carry varies by state, but that minimum may not be enough to protect you in a serious accident. With many cars costing over $50,000, you could easily be responsible for a substantial repair bill if you hit someone’s car and it totals. If you have a personal umbrella policy, you’ll be covered for excess costs, but your insurance company may require you to have more than the minimum to qualify for a personal umbrella policy.

Collision: Covers the cost of damage to your own car in an accident. you don’t have to figure out how much to buy, that depends on the vehicle you insure. but you have to decide whether to buy it and how big of a deductible you have to take. the higher the deductible, the lower your premium. deductibles generally range from $250 to $1,000. Collision coverage is important if a car is new and valuable, but less important as the vehicle’s value declines. If the car is only worth $1,000 and the deductible is $500, it may not make sense to buy collision coverage. State law generally does not require collision insurance.

comprehensive: covers the cost of various damages to your car that are not caused by a collision, such as fire and theft. As with collision coverage, you must choose a deductible. the higher the deductible you choose, the lower your premium will be. comprehensive coverage is usually sold together with collision, and the two are often referred to together as physical damage coverage. If the car is leased or financed, the leasing company or lender may require you to have physical damage coverage, even though state law doesn’t require it.

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medical expenses: covers the cost of medical care for you and your passengers in the event of an accident. The limit you choose under the medical expense coverage is the maximum that will be paid for medical claims for each driver. therefore, if you choose a $2,000 medical expense limit, each passenger will be covered for up to $2,000 for medical claims resulting from an accident in your vehicle.

Uninsured/Underinsured Motorist Coverage: If you are involved in an accident and the other driver is at fault but has little or no insurance, this covers the gap between your costs and the coverage of the other driver, up to the limits of your coverage. In some states, this coverage is limited to bodily injury, while in others it may also cover property damage. the required limits and the optional limits that may be available are established by state law.

Personal Injury Protection (“pip” or “no-fault”): Required by law in some states, this coverage covers you and your passengers’ medical costs, regardless of who the responsible for the accident required limits and optional limits that may be available are established by state law.

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