How Much Car Insurance Coverage Do You Need?

In just about every state, you're required to purchase some form of car insurance before you get behind the wheel. While state-required insurance coverage is a good starting point when investigating how much coverage you need to buy, it definitely isn't the only factor. 

Collisions, whether with another vehicle or stationary object, can be expensive. If you don't have adequate coverage, you could be on the hook for gigantic expenses. 

How much you need, however, depends on your specific situation, including where you live, how much you drive and your particular personal and financial needs. 

"Having adequate auto insurance coverage is both smart and prudent to ensure you and your family are financially protected from a catastrophic loss," says Mark Friedlander, director of corporate communications at the Insurance Information Institute (Triple-I). 

"To have adequate financial protection for you and your family, buy as much as you can afford. Comparison shopping when seeking insurance coverage is time well spent, as premiums could vary by hundreds of dollars between carriers depending on numerous factors."

Just about all states require the two types of coverage below, which do not cover damage to your own car or property.

Bodily injury liability protection: This coverage pays for injuries to others caused by the policyholder and other drivers listed on the policy.

Property damage liability protection: This coverage pays for damage that policyholders cause to another's property. Most prominently, this includes other vehicles, but can also include personal property like fences or mailboxes. 

Personal injury protection: This coverage pays for the medical costs and lost wages of the driver and passengers of the policyholder's car if injury occurs, up to the policy's limits, regardless of fault. 

PIP may also include coverage for funeral expenses and essential services, like child care or dog-walking, that you may be unable to perform due to physical injuries. 

PIP is mandatory in 14 states: Delaware, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Pennsylvania and Utah.

Uninsured or underinsured motorist coverage: This coverage pays for the medical expenses of you and your passengers, up to the policy's limits when an underinsured or uninsured motorist causes an accident. 

Uninsured motorist property damage insurance is available in some states to help cover repairs to your vehicle if damaged by an uninsured driver.

Medical payments: Similar to PIP, this coverage type helps pay for medical costs of the policyholder and their passengers up to the policy limit, regardless of fault. Unlike PIP, medical payments do not cover lost wages or essential services. Med Pay is an optional coverage in most states, but it is required in a few states. 

State-mandated insurance coverage is the minimum for driving, and typically doesn't include damage to your car. If your car is financed or leased, your lender may require you to carry full coverage, meaning both comprehensive and collision.

Collision coverage: This coverage pays for damage to your vehicle in an accident resulting from a collision between your car and another car or an object.

Comprehensive coverage: This coverage pays for damage to your car caused by an event other than collision. This includes theft, fire, flood, hail, vandalism and more.

All but two states (New Hampshire and Virginia) require residents to purchase a car insurance policy. However, even if your state doesn't require you to purchase insurance, it's a good idea to do so anyway, according to Friedlander. 

Accidents can be costly, and collisions and injuries can happen just about anywhere while you're on the road.  That said, required coverages and limits vary from state to state.

For example, while Massachusetts requires at least $20,000 bodily injury liability per person and $40,000 per accident, New York requires bodily injury liability limits of $25,000 per person and $50,000 per accident. 

Geico has a helpful tool that lets you check your state's minimum coverage requirements as well as a breakdown of each state's laws.

That said, most insurance experts caution that purchasing only your state's minimum insurance requirement will leave you with grievously inadequate coverage. 

"Whenever possible, we strongly recommend that you get insurance well above the state minimums," Friedlander said. "Only purchasing the state minimums leaves you and your family financially vulnerable."

Thus, being aware of your state's requirements is only the first step. You'll want to start with what is required and add to your policy from there.

Previous Post Next Post