How Much Auto Coverage do you Need?
Figuring out how much auto insurance you need can be a chore, because there are several different options for your coverage.
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The Components of a Policy
Bodily Injury Liability: Compensates passengers in your car, and the driver and passengers in the other vehicle involved in a crash.
Property Damage Liability: Covers damage to the other driver’s car.
Personal Injury Protection: Pays medical expenses and funeral costs for you and any family members.
Uninsured/Underinsured Motorist: Pays for damage to you, your passengers and your car if you’re involved in a collision with an uninsured driver.
Medical Coverage: Covers damage to you and your passengers.
Collision: Pays for car repairs, regardless of who was at fault in the crash.
Comprehensive: Covers damage caused by vandalism, theft and fire.
What Coverage do you Need?
- You can safely cancel medical coverage if you already have health insurance—you don’t need both types.
- Personal injury protection isn’t necessary if you have separate health, life and disability policies.
- Comprehensive and collision are both important, but these are cash-value coverages, meaning that the most they can pay out is the current cash value of your car. Often there’s little benefit in maintaining these benefits on older cars.
- Liability coverage is essentially asset protection in the event that you are sued. The amount of coverage you get should be enough to protect your assets.
- More than 15% of people drive without insurance (and up to 25% in some states). Bear this in mind when deciding whether you need uninsured motorist coverage.
- Extras such as towing coverage and rental-car reimbursement aren’t worth the cost. Towing coverage, for example, costs around $25 a year but provides very little real benefit.
Paying higher deductibles lowers your premiums, but increases the amount you must personally cover if an accident occurs. In general it’s best to pay the highest deductible you can afford if you want to keep your premium costs low.
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**Auto Insurance Finder is not an insurance broker or carrier. Content on this site is for comparison and informational purposes only. The products and services listed on this site may not be available in all states.
Last Updated: February 14, 2008
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