How Much Car Insurance Do I Need? September 2024

Your state only requires minimal liability coverage, or maybe not even that. Your dad might not carry any comprehensive or collision insurance on his 20-year-old truck, but your bank requires both coverages on your new ride. Asking, “How much car insurance do I need?” is a good question.

Here are pointers that can help you answer the question, “How much car insurance do I need?”

Is Auto Insurance Required?

You must buy and maintain auto liability insurance to drive your car on public roads in every state except New Hampshire and Virginia. Liability insurance can pay for injuries to other people and cars or property damage resulting from an accident you cause.

Licensed drivers in New Hampshire and Virginia must meet financial responsibility rules if they don’t purchase car liability insurance.

What You Are Protecting

Since it’s called auto or car liability insurance, many people think about spending as little as possible to get enough coverage to legally drive their vehicle. However, car insurance goes beyond simply meeting your state’s mandate. Auto liability insurance can help safeguard your financial well-being.

If you cause a serious accident with multiple injured people and car and property damage, state-mandated minimum liability limits might not be enough to pay for medical bills and car repairs you’re liable for.

You could find yourself facing auto lawyers and lawsuits that lead to you digging into your savings or selling off assets to pay. You could even have your paycheck garnished.

How Much Liability Insurance Do I Need?

To drive legally, you only need the amount of auto liability insurance required by your state. The most common liability limits are $25,000/$50,000/$25,000, which indicates:

• A limit of $25,000 for bodily injury per person

• A limit of $50,000 for bodily injury per accident

• A limit of $25,000 for property damage per accident

However, many car insurance agents recommend you purchase coverage at least equal to your net worth. Consider that the average auto liability insurance claim for bodily injury was $24,211, and for property damage, it was $5,313 in 2022.

Spending more for higher liability limits can safeguard you down the road, even if your bank account has fewer zeros than you’d like or, perhaps, because you don’t have great wealth.

How Much Bodily Injury Coverage Do I Need?

Many people carry bodily injury coverage of $100,000 per person and $300,000 per accident, but that still might not be enough liability coverage to safeguard you from financial harm if your net worth exceeds $100,000 and you cause a serious accident.

If your net worth is $90,000, a liability coverage limit of $100,000 for bodily injury might be appropriate. The average American income is $68,531. Adjust the coverage you buy based on what you have to safeguard.

How Much Property Damage Car Insurance Do I Need?

Most minimum limits set by states won’t provide the coverage you may need if you cause a serious accident. Matching your property damage limit to your per-person bodily injury limit can give you comfort that you’re at least covered beyond your net worth.

The overall amount of liability coverage you need depends on your risk factors — whether you have young drivers you have to account for, how much you drive and where, and financial considerations, such as your net worth.

What Car Insurance Coverage Do I Need?

Beyond what is required by your state, your financial circumstances and your lender or leaseholder can also drive the car insurance you need. Here are the standard car insurance coverage policies you might consider beyond liability.

Collision

This policy can pay to repair or replace your car if it is damaged in an accident. Collision insurance is not required by any state, but the lender of your auto loan or leaseholder might require it.

Comprehensive

A comprehensive policy can provide coverage against damage to your car from hazards other than an accident, such as theft, vandalism, weather, fire, and collisions with animals.

This coverage isn’t required by your state either, so you might ask, “How much comprehensive coverage do I need?” That can depend on whether you finance or lease your car. You may be required to purchase coverage up to the value of your loan or lease.

If you own a car outright, consider whether you can afford to repair the vehicle. Insuring it up to its value can give you comfort that you won’t have to pay out of pocket for repairs.

Personal Injury Protection/Medical Pay

Known as PIP and MedPay, these coverages are required in a few states. Check with your Department of Motor Vehicles to see that you have the auto insurance you need. PIP can pay for the medical bills, lost wages, and rehabilitation expenses of people in an accident in your vehicle. MedPay just pays for medical expenses.

Uninsured Motorist/Underinsured Motorist

These coverages help safeguard you if you’re in an accident with a driver who doesn’t have auto insurance or whose liability limits aren’t high enough to cover your losses.

Packaging these policies together can provide you with good auto insurance coverage to keep you on the road with safeguards for your financial well-being.

Find the Car Insurance You Need

If you’re among the many people buying new cars or just searching for answers about auto insurance, we can guide you in finding the auto insurance coverage you need or share our knowledge to help you make an informed decision.

At ConsumerShield, our mission is to help you — the consumer. Give us a call today to discuss your car insurance needs.