Deciding how much car insurance to buy depends factors such as your budget and desire for good insurance. Each state sets a minimum car insurance amount you must have, and you may want to purchase additional insurance to cover you on all fronts.
Recommended auto insurance coverage
Liability: Liability car insurance covers the medical expenses and property damage for others if you cause an accident. It is often written as three numbers that correlate with:
- Bodily injury per person
- Bodily injury per accident
- Property damage per accident
If you purchase 25/50/10 in liability car insurance, you have $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $10,000 for property damage. State law determines how much liability coverage you need to buy. From there, you can purchase an additional amount of insurance coverage.
Compare: Cheap car insurance
How much insurance is right for you?
|Car insurance coverage amount||Who is it good for?|
|Your state's minimum required insurance||
|Liability limits of 100/300/50||
|Liability limits of 250/500/100||
|Collision and comprehensive coverage||
Collision insurance: After an accident with another car, collision insurance pays for the repair or replacement of your vehicle.
Comprehensive insurance: This covers car theft and the repair or replacement of your car if the damage is caused by weather, fire, flood, natural disasters, explosion, vandalism, animal damage or falling objects. This is recommended insurance if you live in an area where bad weather such as hail or tornadoes are common.
Personal injury protection (PIP): Covers the medical expenses of you and your passengers no matter who caused the accident.
Uninsured motorist coverage (UM): Pays for your medical bills if you are hit by someone driving without insurance or without enough insurance. In some states uninsured motorist insurance is also available for car damage, a type known as uninsured motorist property damage coverage.
Which car insurance types are not necessary?
The best car insurance coverage to have is not necessarily the most amount of coverage possible. Certain kinds of typical insurance coverage are redundant with others.
Uninsured motorist coverage, PIP and MedPay
- Redundant to: Your health insurance
- Things to consider: All these coverage types pay for medical bills. You may want to consider UM, PIP or MedPay if you have a health plan with high deductibles and coinsurance. Also, UM, PIP and MedPay can pay for pain and suffering and other expenses that your health plan does not. Some states require UM and/or PIP.
Uninsured motorist property damage (UMPD) coverage
- Redundant to: Collision coverage
- Things to consider: Both types pay for damage to your car. UMPD pays out only if an uninsured or underinsured driver crashes into you. The advantage to UMPD is that it typically has a lower deductible than collision coverage.
Your car insurance needs
With these factors in mind, how much car insurance do you need? Purchase what you can afford. One of the worst things to do is allow a policy to lapse because you can't afford to keep up with the payments. If you can't afford full coverage car insurance, the best auto insurance coverage for you may be a bare-bones policy.
Driving without car insurance can lead to fines and license suspension.