How much car insurance do I need ? Get tips from the experts
If you’re wondering how much auto insurance you need, the short answer is that you need the minimum amount of auto insurance required by your state to drive legally. Insurance is required in all states except New Hampshire, so make sure you understand your state’s minimum auto insurance requirements.
However, the state minimum is rarely enough coverage to provide protection in the event of an auto accident or collision.
We’ll walk you through our guide so you can understand what type of car insurance you should get. You can also use the tool to see car insurance coverage recommendations based on what drivers like you have purchased.
You can also use our car insurance estimator tool to determine how much car insurance you need.
How much car insurance do I need?
The editors of carinsurance.com recommend the following liability limits of 100/300/100:
- up to $100,000 for medical bills for people you injure
- capped at $300,000 per accident
- and up to $100,000 to repair the cars and property of other drivers you damage.
- Liability: Liability coverage insures you if your car causes injury or property damage to another person. most states require you to have liability coverage to legally drive on the road.
- Collision: Collision coverage pays for damage to your car caused by the collision, whether or not the accident was your fault.
- Comprehensive: Comprehensive insurance covers damage to your car caused by factors other than a collision, such as weather, fire, or theft.
- Uninsured Motorist Coverage (um/uim): Underinsured or uninsured motorist coverage pays for damage to your vehicle in the event the other party is underinsured or uninsured after an accident.
- personal injury protection (pip): pip is coverage that pays your medical bills and covers lost wages and other expenses for you or your passengers, regardless of who be to blame. in an accident.
- medical payments coverage (medpay): medpay or medical payments coverage is similar to personal injury protection. covers your medical expenses related to injuries resulting from an accident, regardless of who was at fault.
- The first two numbers refer to bodily injury liability, which pays the hospital bills of anyone you hurt: the first number is the limit per person and the second number is the limit per accident.
- The third number is the property damage liability limit, which covers property damage.
- The average annual rate for state minimum liability coverage is $511.
- The average annual rate for liability coverage with 50/100/50 limits is $637.
- The average annual fee for comprehensive coverage with 100/300/100 limits and a $500 deductible is $1,682.
- gap insurance: If your car is a total loss due to an accident, this coverage option will cover the difference between what you owe on your loan or lease and actual cash value of the vehicle.
- Roadside Assistance Coverage: This coverage may be a good option for people who drive frequently. covers service calls and towing costs if your car breaks down, but doesn’t pay for vehicle repairs.
- car rental reimbursement coverage: pays for a car rental after a covered claim. Adding this endorsement could be helpful if your car is undrivable due to a covered incident.
- Non-owner auto insurance: Non-owner auto insurance is a form of liability coverage that provides protection for people who do not own a vehicle but still need to drive someone else’s from time to time. pays if you cause injury or property damage in a mishap with another person.
- mechanical breakdown insurance: if your car has problems for reasons that are not related to an accident, mechanical breakdown insurance (mbi) is there to cover the costs to fix it.
- rideshare insurance: personal coverage generally does not apply if you drive for a rideshare company like uber or lyft.
-
-
-
- Check: You’ll see that the rates that major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much the average auto insurance rates in your neighborhood can differ by entering your ZIP code into our comparison tool.
- Look for auto insurance discounts: driving safely, getting good grades, combining with a homeowners policy, and installing safety features are some of the ways you can get discounts on your car insurance. policy.
- maintain a clean driving record and a good credit score.
- Buy a vehicle that has a good safety record.
- Increase your insurance deductible.
You should purchase enough auto insurance to protect yourself from financial ruin if you are in a car accident. Liability insurance protects other drivers in the event of an accident, but the minimum limits are often so low that they do not provide adequate coverage; They also won’t help cover the cost of your car repairs.
even so, says aniruddha pangarkar, assistant professor of marketing at austin e. Cofrin School of Business at the University of Wisconsin-Green Bay, “A cautious and careful driver who is unlikely to have an accident might consider taking lower coverage limits as required by his or her state.”
what are the types of auto insurance coverage?
There are six basic types of auto insurance coverage: liability, collision, comprehensive, uninsured/underinsured motorist protection, personal injury protection, and medical payments coverage.
How much liability insurance do I need?
Minimum liability coverage is rarely recommended, but if you can’t afford more, it’s better than no insurance. if you have no savings or assets, minimum liability coverage may be enough. In most states, the minimum liability required by your state is not enough to pay for serious injuries or to replace a newer car. just driving legally is enough.
As mentioned above, carinsurance.com recommends liability limits of 100/300/100.
but there are other coverage limits. at the following levels:
50/100/50 coverage limits
This level of coverage is recommended for those who have an older car, few assets, do not drive often, or are on a tight budget, such as college students or retirees.
100/300/100 car insurance limits
For people of average income with a typical level of savings, this level is adequate in most circumstances. The cost of civil liability insurance, once the basic levels have been acquired, does increase, but not exponentially, according to data from 2022:
To see how much the average driver pays for liability coverage in each state and how much more you would pay to increase your coverage, see the chart below.
250/500/100 coverage limits
If you own an expensive home or have a high net worth, consider supplementing this level of coverage with a general liability policy that extends your protection by $1 million or more. It’s relatively inexpensive: A $1 million blanket policy costs $150 to $300 a year, on average, according to the Insurance Information Institute.
Do I need full coverage insurance?
Full coverage includes all risks and collision: Full insurance pays for damage to your car from bad weather, fire, animal collisions and theft; Collision coverage pays to repair your car if you’re in an accident, regardless of fault.
If you owe money on your car, your lender requires you to have comprehensive and collision coverage, which would repair or replace your car. Liability insurance pays only for other people’s cars. you must choose a deductible amount for comprehensive and collision coverages. damage below this amount is your responsibility to repair.
Do I need uninsured motorist car insurance?
If you have your own health insurance and have purchased collision coverage, you may be able to waive uninsured motorist coverage if your state allows it. It’s a good idea to keep uninsured motorist coverage if you can afford it, as it minimizes financial losses from deductibles and coverage limits.
Also, hitting an uninsured motorist could spell disaster: In 2019, 12.6% of motorists, or about one in eight drivers, were uninsured, according to a 2021 study by the Council of insurance investigation.
Your state may require you to purchase uninsured motorist bodily injury coverage, which pays hospital bills if you’re hit by an uninsured driver. your state may only require that you be offered this coverage, but allow you to decline it.
Do I need medical payments or personal injury protection coverage?
Your state, especially if it is a no-fault state, may require you to purchase personal injury protection so that your injuries in a car accident are always covered up to their limits, no matter who was at fault for the accident. it usually also includes coverage for lost wages. if you do not have health insurance, these coverages are recommended.
Some states require medical payments coverage, but in most it is optional and pays medical expenses up to the limit. If you do not have your own health insurance coverage, you should consider this coverage. If you have a high deductible health plan, medical payments can help pay your deductible.
what are some other types of auto insurance?
Auto insurance companies also offer a variety of optional coverages. some may be more helpful than others, so it’s important to review your policy and determine which one applies to you:
how can i save money on car insurance?
There are several ways to save on car insurance. one of the best is to shop around. but it’s important to understand that your driving record and other factors affect your premium.
“People with a low credit score are considered risky investments, which can increase your premium,” says dr. Pangarkar says. “There are other factors that affect your insurance premium, such as the zip code where you live; the year, make and model of your car; how many miles do you drive annually… how old is he; etc.”
You’ll find that the rates that major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much the average car insurance rates in your neighborhood can differ by entering your ZIP code into our comparison tool.
The insurance industry is highly competitive and many companies want to acquire new customers from their rivals, dr. pangarkar says.
Here are other ways you can save money on your car insurance payments:
Another way to save money on your auto insurance is to sign up for a telematics program to monitor your driving habits.
pangarkar recommends calling your insurance company and asking for discounts, and says that low-mileage auto insurance companies are a good option and very beneficial for consumers who drive less (typically less than 7,500 miles on average). a given year).
“Note that auto insurance companies generally offer two types of discounts for consumers with low mileage. the first is where consumers who drive below a certain threshold (usually 7,500 miles as mentioned above) qualify,” pangarkar says.
“in this first case, companies like geico and state farm offer very competitive rates that can help drivers obtain significant discounts. For the second type of discount, which is calculated on a pay-per-mile rate basis, many insurance companies such as National, Allstate, and Freedom Mutual offer discounts in this category. Many companies use apps to track driving history. nationally it is a company that has a reputation for offering good discounts in the pay per mile category.”
resources & methodology
sources
insurance information institute. “Facts + Statistics: Uninsured Motorists”. accessed July 2022.
methodology
carinsurance.com commissioned quadrant reporting services to report average car insurance rates for nearly every zip code in the United States. rate includes uninsured motorist coverage.
note: liberty mutual, one of the largest auto insurers in the us. In the US, it is not included in the list of insurers that offer cheap auto insurance due to a lack of public information about the company’s rates.
your rate depends on your personal factors and the vehicle.
– michelle megna contributed to this story.
