How much auto insurance do I really need?
Most states have minimum liability requirements for all drivers, but you'll need full coverage if you're paying off a car loan. The average cost of full coverage is $79.58/mo.
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UPDATED: Oct 19, 2021
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- By law, you are required to carry a state-mandated minimum amount of liability insurance, and sometimes other types of coverage
- In addition, if you finance a car, your lender will require you to carry certain types of auto insurance
- Liability insurance is the insurance that is required by the state in which you live
- While there are other small insurance options, such as roadside assistance, towing services, and so on, these are the ones that you need to consider when buying a car.
- It is very important that you shop around for your insurance options
The amount of auto insurance you really need is decided by state and personal factors.
By law, you are required to carry a state-mandated minimum amount of liability insurance, and sometimes other types of coverage.
In addition, if you finance a car, your lender will require you to carry certain types of auto insurance. However, you may need more than this to truly protect yourself.
Enter your zip code below and compare auto insurance rates for different policy types and amounts today!
The bottom line is that no one can tell you how much insurance you need, only you can make that determination.
The good news is that you can narrow down the answers for yourself by answering a few questions about your personal situation, the type of car you drive, the value of your car and so on.
Keep reading to learn for yourself how to determine how much insurance you really need.
What questions should I be asking to determine how much insurance I need?
Here are some good questions to get you on track:
– How much is your car worth?
The first question you need to ask is how much is your vehicle worth? If you own a $500 car, then liability insurance may be all want to purchase.
Comprehensive and collision coverage will be much more expensive than the total value of your car. You would do better to save that money in the event that you have a car accident that totals your vehicle.
If you have a vehicle that costs more than you could afford to replace, then you should consider more comprehensive insurance solutions.
That way, if your vehicle is totaled, then you have the insurance to receive a check for the value of your vehicle.
– Is your car financed?
If your vehicle is financed, then get prepared to purchase full coverage for your vehicle.
Banks don’t like to take risks with their investments. As such, they require all drivers who borrow money to buy a car to maintain a certain level of insurance.
The amount of insurance you will be required to carry will vary between lenders. Some specify the amount of each type of auto insurance you are required to carry while others are content with the minimums of each type.
– How much do you drive?
If you drive more than 20 miles each day, then your risk of having an accident increases. You need to consider that when determining how much insurance you need.
Unfortunately, insurance companies do charge more for insurance if you drive a lot, so that is something that you will need to plan for if you are on the road all of the time.
– Where do you live?
If you know for a fact that you live in an area where car theft is a daily problem, then carrying comprehensive insurance is simply a smart thing to do.
Another consideration is whether you live in an area with a lot of natural disasters.
If you live on the Florida coast, for example, your car is more likely to be struck by debris from a storm or hurricane than someone who lives in Central Florida.
– Who is driving your car?
The bottom line is if you are an adult with teen drivers, you will want to carry extra protection on your car. Teens are far more likely to be involved in a serious accident than any other driving group.
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What types of auto insurance should I consider buying for my vehicles?
There are several types of insurance. Liability insurance is the insurance that is required by the state in which you live. This also protects other drivers from you.
Simply put, if you cause an accident, your liability insurance pays for the damages that you cause to other vehicles involved in the accident.
Comprehensive insurance is insurance that provides you with coverage in case of theft or damage that isn’t caused by a collision or an auto accident.
Collision insurance provides coverage should you collide with someone or something else. If for example, you are the cause of an auto accident, this is the insurance that will pay for the damages to your personal vehicle.
Uninsured/underinsured coverage provides you with coverage should someone else cause an accident that doesn’t have insurance to cover all of the damages and they don’t have the financial means to sue them to get the payments for your damages.
PIP (personal injury protection) provides you with medical care should you be without health insurance and you are injured in an accident. This is a common option in no-fault states.
While there are other small insurance options, such as roadside assistance, towing services, and so on, these are the ones that you need to consider when buying a car.
How can I afford to pay for full coverage on my vehicle?
Despite popular belief, your insurance doesn’t have to cost you an arm and a leg.
It is very important that you shop around for your insurance options.
The reason for this is that there can be a vast difference between insurance company prices and you want to take advantage of that.
You can do that right now by entering your zip code and comparing free auto insurance quotes!