How Much Auto Insurance Do I Need: The Complete Coverage Guide

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Car insurance is as essential as health and life insurance for anyone who owns a car. If you need a car to operate efficiently, then getting an insurance policy that covers it against any mishap is crucial. However, you don’t need to pay a lot for car insurance if you do your homework. This guide answers the question on “how much auto insurance do I need to fit my needs.”

How Much Auto Insurance Do I Need?

Your auto insurance is a collection of different policies used to cover the car in different ways. These policies can be broken down into the following categories:

  • Liability coverage
  • Bodily injury liability
  • Property damage liability 
  • Personal injury protection
  • Collision and comprehensive covers

There is no definitive answer on how much auto insurance you need because people have different demands depending on their assets’ value. The inclination to auto insurance is to get the minimum insurance coverage required by the law that provides adequate liability insurance. If you have few assets, the minimum level as required by your state will be enough to fit what you need. In most cases, the total value of your assets determines how much coverage is needed.

However, the minimum coverage might not fully protect you and your assets because accidents cost more than the minimum limits. Hence, you need to carry more than the minimum coverage unless your car has no assets to protect. The idea is to have adequate coverage against uninsured drivers by going for a full insurance coverage policy. A full coverage auto insurance combines the collision and comprehensive insurance plus liability coverage.

It is worth having collision and comprehensive auto insurance because of broader coverage. Collision insurance protects you from damages caused by a direct impact such as accidents, while comprehensive insurance includes theft and vandalism damages. The insurance covers damage to the car as it reflects the market value of your assets. On the other hand, liability coverage pays for injuries and damage caused to others. For example, you can talk to your agent about purchasing higher liability limits that reflect your persona needs.

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How Much Can You Pay For Car Insurance?

Getting full coverage auto insurance provides much better protection than the state-mandated minimums. However, it will mean you pay higher rates to protect against damages that are not your fault. The full coverage will be pricier than having liability coverage as the only auto insurance, but it will protect your car from physical damage and liability.  The average cost of full coverage auto insurance is $1427 per year for any driver with good credit. In most cases, this policy has a deductible payout that is determined by your car’s current value.

The liability insurance auto coverage will cost between $200 and $300 per year in coverage. The policy will cover all the expenses when you are at fault in causing damage. Umbrella insurance can provide the needed coverage as it offers an extra layer of liability protection for your assets. If you are in a severe auto accident that damages your other asset, the umbrella coverage will protect you from liabilities above the current auto or homeowner limits.

You also need to decide on a deductible amount of money paid on a claim. In most cases, experts recommend selecting the highest deductive that is affordable since higher deductible lowers your premium. The idea is to get coverage for significant damages to your car. Hence, get a higher deductive for comprehensive and collision cover.

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Bottom Line

Before purchasing any auto insurance coverage, you need to review your needs because there are different auto insurance forms to fit different needs. For example, examine the coverage needed to protect your assets and any additional coverage that fits your lifestyle. Also, study your other insurance policies to avoid paying for something you don’t need.

After deciding on how much auto insurance you need, begin shopping for the same. The policies will vary from one company to another depending on your car, credit, and driving record. For example, the price you will pay for a full coverage auto insurance depends on personal factors such as credit history and accident history. It will also vary depending on the car insurance company you choose. With average rates for car insurance reflects a policy with liability, collision, and comprehensive coverage. If you want more guidance on how to buy car insurance, request a free quote and try a consultation with ONIT.