This article was reviewed by Andrew Flueckiger, a member of the Finder Editorial Review Board and certified insurance counselor and licensed insurance agent in five states.
To get the right level of car insurance coverage, you need to balance coverage with what you can afford to pay out of pocket for certain damage. The sweet spot will leave you with solid protection while paying as little in premiums as possible.
What's in this guide?
- How much car insurance do I need?
- How to find out how much car insurance you need
- Compare car insurance with the right coverage
- What's the minimum car insurance I need?
- Which coverage is right for your needs?
- When should I buy the cheapest car insurance?
- How to balance coverage and cost
- Bottom line
- Questions about how much car insurance you need
How much car insurance do I need?
To find the right amount of car insurance, you need enough coverage to help you pay for someone else’s car damage or medical bills, but other types of coverage depend on what you’re comfortable paying on your own.
You might compare how much your state’s bare minimum coverage costs versus the maximum coverage you could buy. For example, if your state requires $25,000 in bodily injury liability coverage, bumping up to $50,000 might only cost an extra $10 a month.
We make it easy for you to find out how much coverage you need by answering a few questions:
How much car insurance do I need?
Answer 3 quick questions and compare the right car insurance coverage for you.
Question 1 of 2
Compare how much car insurance you need
|Cheapest rates||Good coverage||Highest coverage|
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How to find out how much car insurance you need
The amount of coverage you need depends on the value of your vehicle, your annual mileage and any driving risks you face. Ask yourself these questions to determine the right coverage for you.
What’s your budget?
The amount you’re willing to pay directly influences how much coverage you can get.
If you need cheap coverage
Start with your state’s minimum coverage requirements. Consider bumping your maximum limit to equal the value of your assets in case another driver sues you.
If you have room for more coverage
Collision, comprehensive, underinsured motorist or medical payments are extras that pay for your car’s damage or your own injuries.
How often do you drive?
The more you’re on the road, the greater your chances of getting in an accident.
If you drive often
Consider higher liability limits like $300,000 due to the high chance that you may cause an accident.
If you don’t drive often
Ask about low mileage discounts or pay-per-mile insurance that rewards you for driving less.
Do you have a clean driving history?
Your driving habits will affect your insurance rates.
If you have a clean record
Ask about safe driver discounts and or a telematics program that tracks your driving habits through a device or app in exchange for potentially lower rates.
If you have a few tickets or claims on your record
Consider a defensive driving course or look for companies that specialize in high-risk insurance to get lower rates.
What vehicle do you drive?
New or foreign vehicles can cost a lot to repair, while older, run-down vehicles might not be worth repairing.
If you drive a new or expensive vehicle
You probably want collision coverage with limits high enough to repair or replace your car. Also consider comprehensive to cover theft or storm damage, and gap insurance to cover the full cost of your loan if your new car is totaled.
If you drive an older car
You need liability coverage, but collision coverage might not be worth it if your car is worth only a few thousand dollars. Consider roadside assistance if your car is prone to breaking down.
Where do you park?
Your parking spot can impact the risk of damage or theft, and therefore your rates.
If you park on the street
Consider comprehensive coverage to cover most damage to your car from anything other than a collision like storm damage. You also might want uninsured motorist property damage to cover hit-and-runs without paying your collision deductible.
If you park on your property or in a garage
You still might want comprehensive coverage in case of a break-in or storm damage.
Will you need a rental if your car is in the shop?
Repairs can take a few days or weeks, so think about how you’ll get around in the meantime.
If you have another means of transportation
You might not need rental car coverage or roadside assistance if you can rely on a friend or family member, or have access to decent public transportation.
If you don’t have another way of getting around
Consider rental car coverage, which pays for a rental car while yours is in the shop.
Do you have a car loan?
You might want extra coverage if your vehicle is leased or financed.
If you have a car loan
Your lender probably requires you to have collision and comprehensive coverage. Consider adding gap insurance to pay off your loan if your car is totaled before you finish paying it off.
If you don’t have a car loan
Insure your car for its full value so you don’t lose out if it’s totaled, and consider collision and comprehensive if it’s your daily driver.
Do you have health insurance?
Medical bills can add up if you’re not covered during a car accident.
If you don’t have health insurance
Consider personal injury protection or medical payments coverage. While these aren’t a substitute for health insurance, they can provide some financial help in an accident.
If you already have health insurance
Medical payments coverage and personal injury protection extend your coverage or even pay for your health insurance deductible, though not everyone needs these.
Do you have any modifications or custom equipment?
Modifications can affect your insurance rates and coverage.
If your vehicle is modified
Consider adding modifications coverage, which protects custom features not covered by your standard policy.
If your vehicle is standard
Ask your insurer about original equipment manufacturer (OEM) part replacements, which repairs your cars with original parts after an accident.
Compare car insurance with the right coverage
What’s the minimum car insurance I need?
Every state has different minimum car insurance requirements that you want to be aware of before getting on the road. Those requirements can include:
- Property damage liability with specific limits like $50,000 to pay for another person’s damaged car or other property if you’re at fault.
- Bodily injury liability with limits like $50,000 per person, $100,000 per accident to pay for another person’s injuries if you cause the accident.
- Underinsured motorist coverage to pay for your own car’s damage or medical bills if the at-fault driver can’t pay. You sometimes can opt out of this coverage.
- Personal injury protection to pay for your medical bills and sometimes expenses like childcare and lost income if you’re seriously injured, typically required in states with no-fault laws
What happens if I don’t have enough coverage?
If you get in a wreck without enough insurance to pay for the damage, you’ll be responsible to pay for any damage out of pocket. If you have assets like a savings account or home that could pay for this damage, you might be required to dip into your savings or home equity.
Which coverage is right for your needs?
When comparing coverage, consider the three main types of coverage: liability, collision and comprehensive. Then decide if you can afford any additional coverage.
Compare coverage types and costs to determine which fit your needs, based on where you live and how much you can spend.
|Type of insurance||What is it?||Who is it best for?||What’s the annual cost?|
|Liability coverage||The most basic insurance. Pays for property damage and medical expenses of the other driver when you’re at fault.||Almost everyone needs it. Consider state minimum limits if you’re looking for the cheapest policy or if your car isn’t worth repairing.||$500–$1,000|
|Collision coverage||Covers damage to your vehicle when you’re involved in an accident.||If you don’t want to pay out of pocket to repair or replace your car. It’s especially good if your car is new or expensive or if you’re leasing or financing a car.||$100–$300|
|Comprehensive coverage||Protects your vehicle from damage that happens off the road, such as theft, weather or vandalism.||If you’re looking for extra protection or live in areas prone to adverse weather conditions or high crime rates.||$100–$300|
|Medical payments coverage||Pays for your medical expenses resulting from an accident, regardless of who’s at fault.||If you don’t have health insurance, a plan with low coverage limits or a high deductible plan.||$50–$100|
|Personal injury protection||This is similar to medical payments coverage, but it also covers the costs of rehabilitation and lost wages if you’re unable to work following an accident.||If you live in a no-fault state, don’t have health insurance or need extra coverage. Required in some states.||$50–$100|
|Uninsured and underinsured motorist coverage (UM/UIM)||Protects you if the other driver doesn’t have any or enough auto insurance to cover damage to you or your vehicle.||Those who live in an area with a large number of high-risk or uninsured drivers.||$50–$100|
When should I buy the cheapest car insurance?
Getting your state’s minimum coverage could give you cheap car insurance rates. But it could cost you more in the long run if you’re saddled with out-of-pocket costs after an accident.
Only a few situations warrant considering minimum coverage:
- You drive less than 10,000 miles per year. The less you drive the less you risk getting in an accident.
- Your car is worth only a few thousand dollars. You might pay more for collision and comprehensive coverage than your car’s value over several years.
- You have little to no income. If you’re living paycheck to paycheck, the savings might be worth it as long as your risk of getting in an accident is low.
- You’re working to remove points from your license. If you have a poor driving history, buying minimum coverage can offset high premiums.
How to balance coverage and cost
The cheapest car insurance you can find won’t necessarily be the best car insurance. When selecting car insurance, you’ll want to weigh cost versus value to find the right insurance for your needs.
- Accident forgiveness could save you long term. If your rates go up because of a fender-bender, you could end up paying more in the long run. You can find this feature included in standard policies with some companies.
- Customer service is usually worth paying for. Getting great support may be worth the extra couple dollars each month. You might wish you’d factored in customer support when it comes time to file a claim or get help with an issue.
- Less coverage means less protection. Your state’s minimum requirements are a good place to start. But in a major accident, you might be glad you increased your coverage. After your coverage maxes out, you’ll be left footing the bill.
- Free towing comes in handy. Included roadside assistance can end up paying for itself when you consider the fees, hassle and time involved in getting help when you’re stranded on the side of the road.
- Shopping around could save you money for the same coverage level that you could get with your current insurance company.
- Review your coverage regularly or after a life-changing event like buying a home. Doing so makes sure that you have plenty of coverage for your current life situation.
- Find a deductible in your budget’s sweet spot. You don’t want a deductible so high that it would leave you in financial difficulty if you had to pay it.
How much car insurance is too much?
You have too much car insurance coverage if your coverage costs more than your car is worth or if you have coverage like roadside assistance elsewhere, such as through your AAA membership or new car warranty.
To find out if extra collision and comprehensive coverage is overboard for your car, consider the following factors:
- What your vehicle is worth
- What your deductible is
- How much collision and comprehensive cost
If your deductible is more than your car is worth, it’s time to drop collision and comprehensive. Otherwise, consider how many premium payments it would take to reach your car’s value.
Auto insurance can help protect you from the unexpected and get back on your feet after an accident. Ultimately, the type of coverage that’s best for you depends on where you live, what type of car you drive, whether you’re financing your vehicle and other factors.
Regardless of which type of policy you decide on, compare car insurance companies to get the best price.
Questions about how much car insurance you need
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