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Insurance Coverage Meter

How Much Car Insurance Do I Need?

updated: Mar. 29, 2016 –

When looking to buy an auto insurance policy, you have a lot of unique coverages to choose from and each is useful for particular situations.

As you can imagine, the more coverage you have on your insurance policy, the more protected you will be. However, more coverage also means higher monthly premiums, so it is up to you to find the fine line between protection and affordability you feel comfortable with.

Full Coverage for Peace of Mind

Those that can afford it often go for full coverage insurance. This type of policy costs more, but covers just about any situation in which your car is damaged. A full coverage policy will pay for the following things when you, as the driver, cause an accident:

  • Medical bills for other people injured in the accident.
  • Repair bills for damage to the other vehicle in the accident.
  • Repair bills for your vehicle damaged in the accident.

These items are covered by two forms of auto insurance that are included in every full coverage policy: liability and collision. The third form of insurance that is standard in every full coverage policy is called comprehensive and it covers:

  • Repair bills for your vehicle should it sustain damaged in a non-accident situation (theft, vandalism, acts of nature etc.).

However, don’t assume a standard full coverage policy offers you complete protection. There are additional services such as personal injury protection or uninsured motorist coverage that are useful extras that can be added to your policy. They can save you money in the event of an accident, but keep in mind they will increase your monthly premiums as well.

When Full Coverage is Unnecessary

While a policy that includes all features mentioned will provide the most complete protection for you and your car, it is not something all motorists can afford or even need. There is such a thing as spending too much on car insurance and that is why it is important for you to consider your own needs carefully when you are buying a new policy.

The most important factor is your car’s worth. If you have a new or expensive car, you would certainly want to protect your investment. However, if you have an old or inexpensive car, it simply might not be worth the additional insurance costs to add comprehensive or collision to your policy.

Your Policy’s Limits

Finally, one of the most important things that defines how well you are protected is the level of limits your policy contains. Most people choose higher limits than their state’s minimum requirements because it is very easy to exceed a state’s minimum limits. Given the minimum requirements in most states, a serious accident could easily leave you responsible for $100,000-$300,000 in medical bills. Choosing lower limits can save you a lot on your car insurance, but it’s important you understand the risks involved.

When shopping for auto insurance, we recommend first comparing quotes that have high liability limits. This way you might find a rate you can afford, that also provides thorough coverage.