Figuring Out How Much Car Insurance You Need

Figuring out how much car insurance you need doesn't have to be difficult. Once you know your state insurance requirements, you can review your optional coverages and use a car insurance calculator to determine what you need. We can help you understand optional auto insurance coverage options and gather car insurance quotes so you can be sure to get the best deal. Our free tool can help you find cheap auto insurance quotes that provide all the car insurance you need.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and ...

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent

UPDATED: Jul 19, 2021

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When you’re considering your auto insurance coverage options, figuring out how much car insurance you need to purchase is a delicate balance. You want to buy enough coverage to make sure that you are protected in the event that something happens to you or your vehicle (or both).

At the same time, nobody wants to waste money on premiums if they never end up using it. Below, you can use our handy guide and auto insurance calculator to figure out whether you’ve purchased too much coverage, not enough, or if you hit the sweet spot of insurance policies and purchased just the right amount.

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Bare Minimum Car Insurance

Every state has a certain level of auto insurance coverage that you must buy in order to drive legally. Failure to do so can lead to some serious penalties or even jail time if you get caught. Fortunately, these minimums are so low that most drivers can afford them, no matter what their economic situation.

Unfortunately, the coverage limits on such policies are usually so low that in the event of a collision, you will likely be paying out of pocket to cover all of the necessary expenses of getting you back on the road. Furthermore, this type of coverage is liability only.

This means that the accident has to be your fault (or at least partially your fault) before your insurance company will accept your claim and pay out expenses. If someone crashes into you and damages your vehicle or causes you injury, your insurance company won’t pay a dime.

Mandatory State Minimum Auto Insurance PremiumsLegend: Mandatory State Minimum MinnesotaIowaNew JerseyCaliforniaWyoming 1020304050607080$30$12$72$84$27

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Determining Liability Coverage Limits

Liability, as discussed above, is the least you need if you want to protect yourself from financial hardship when you are deemed at fault in an accident.

If you decide that the state mandatory minimum is too low, you can invest in an insurance policy and ask your agent to raise your policy limits. If you happen to have many lucrative assets to protect, this is a smart move.

If you are found at fault in a serious collision and your policy limits failed to cover the expenses you are held liable for, the other driver’s insurance company or the other driver themselves could come after you in court. If they win, your assets can be frozen and liquidated in order to pay for the costs.

However, if you don’t have any assets, there’s only so much that the afflicted parties can do in order to get the money that you owe them. After all, you can’t squeeze water from a stone. This unfortunate reality might inspire some to carry lower liability limits on their insurance policy.

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Low vs. High Liability Coverage LimitsLegend: Mandatory State Minimum Recommended Liability Limits MinnesotaIowaNew JerseyCaliforniaWyoming 153045607590105120135150165180$30$60$12$41$72$125$84$194$27$83

Collision and Comprehensive Recommendations

Collision and comprehensive coverage serve a couple of different purposes. For one, it allows you to file claims with your insurance company if an act of nature damages your vehicle.

It also covers you if another driver crashes into you and is found to be at fault.

But there are limits to how practical collision and comprehensive coverage can be. This type of coverage makes a lot of sense on newer vehicles which may have significant repair or replacement costs in the event of serious damage.

But for older cars, especially vehicles that are valued at less than $2,000 (which is the highest deductible you can choose for this type of coverage), then purchasing comprehensive and collision just might be a waste of money.

Liability Only vs. Comprehensive Car Insurance RatesLegend: Recommended Liability Limits Comprehensive/Collision MinnesotaIowaNew JerseyCaliforniaWyoming 20406080100120140160180200220$60$75$41$57$125$164$194$239$83$114

Uninsured/Underinsured Motorist Coverage

In some states, uninsured/underinsured motorist coverage is mandatory. This coverage protects you in the event that someone hits you and flees from the scene of the crime, or if someone without insurance coverage causes a collision with your vehicle.

If you live in a state where this coverage is mandatory, then you really don’t have much of a choice. It will become a part of your policy whether you want to purchase it or not. But if you live in a state where this coverage is optional, it’s up to you to use your own judgment.

If you believe that you live in an area where hit-and-runs or uninsured motorists pose a significant risk, then this coverage is a very smart idea. Otherwise, skipping over these benefits may save you some money off your premiums.

Auto Insurance With and Without UM/UIM CoverageLegend: No UM/UIM Coverage UM/UIM Coverage FloridaTexasArizonaNew MexicoCalifornia 20406080100120140160180200220$126$145$101$129$70$85$77$108$194$239

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Personal Injury Protection/Medical Payments

Personal injury protection and medical payments coverage are most often sold in states which have no-fault accident policies. This coverage goes by different names depending on what state you live in.

Personal injury protection kicks in if you get into an accident that is deemed a no-fault accident and you sustain injuries (and medical expenses) as a result of that no-fault accident.

Because fault cannot be determined, the court cannot legally force either insurance company to pay out claims for medical expenses.

If you have personal injury protection on your policy, you can file a claim against that coverage and get some of your medical bills paid for – up to the coverage limits that you purchase, of course.

Like liability, you can choose to purchase as much or as little coverages, you would like. But as with all coverages, the more you purchase, the higher your monthly premiums will be.

Depending on state laws, you may also be able to file a claim against your medical payments coverage if you would rather spread the costs around between your auto insurance company and your health insurance company.

Unfortunately, you’re going to have to sit down and do the math on your own to figure out whether it would cost you less to go with an entity over the other, or just split those costs between both insurance companies.

We hope this clears up some of the confusion regarding the different types of insurance coverage you need, and how much you should be willing to pay for them. This is the first step in deciding what sort of policy you need to purchase for your vehicle.

The next step is to shop around between different insurance companies to figure out which provider will give you the most affordable premium in exchange for the coverage you need.

Use our FREE quote tool to compare insurance rates now!

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