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How much car insurance do I need?
The easy way to compare coverage based on your budget, driving history, mileage and more
Shopping for car insurance can be frustrating. Every provider claims to have the best prices, policy details are often unclear, and let’s face it, nobody wants to buy something they hope to never use.
However, car insurance is mandatory in most states, and can protect your vehicle on and off the road. So, even if you can’t avoid buying insurance, get the most out of your policy by knowing what to look for.
How much car insurance do I need?
Liability coverage meets the requirements for some states, but just meeting the minimum requirements may not be enough. Answer a few questions to find out how much coverage you need.
Which car insurance provider is best for me?
Looking to save on car insurance? Answer these three questions to find a provider that best fits your needs and budget.
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What factors should I consider?
The amount of coverage you need depends on the value of your vehicle, your annual mileage, potential risks to your vehicle and other factors. Ask yourself the following questions to determine how much coverage is right for you.
What is your budget?
The amount you’re willing to pay directly influences how much coverage you can get.
If you’re looking for cheap coverage
Ask about your state’s minimum coverage requirements. Your car won’t be fully protected in the event of an accident, however. And lower premiums can equal higher deductibles.
How often do you drive?
The longer you’re on the road, the greater your chances of being in an accident.
If you drive often
Consider adding collision coverage.
If you don’t drive often
Ask about low-mileage discounts or pay-per-mile insurance.
Do you have a positive driving history?
Your driving habits can directly affect your insurance rates.
If you have a clean record
Ask about safe-driver discounts and consider a telematics device that tracks your driving habits.
If you have a few tickets or claims on your record
Consider a defensive driving course or look for providers that specialize in high-risk insurance to get better rates.
What vehicle do you drive?
New or foreign vehicles can be expensive to repair, and older, run-down vehicles might not be worth repairing.
If you drive a new or expensive vehicle
You’ll likely want collision coverage, but consider comprehensive coverage and higher coverage limits.
If you have a few tickets or claims on your record
You’ll probably need liability coverage to cover other drivers, but collision coverage might not be worth the cost.
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.
If you park on your property or in a garage
You’ll likely get better rates, but you still might want comprehensive coverage just in case of a break in or potential damage.
Will you need a rental if your car is in the shop?
Sometimes repairs can take a few days, 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 don’t have another way of getting around
Consider rental car coverage, which provides an allowance for a rental car while yours is in the shop.
Do you have outstanding car payments?
You might want extra coverage if your vehicle is leased or financed.
If you have outstanding payments
Consider gap insurance, which covers the outstanding portion of your loan if your vehicle is totaled.
If you don’t have outstanding payments
Insure your vehicle for its full value so you don’t lose out if it’s totaled.
Do you have health insurance?
Medical bills can add up if you’re not covered in the event of an accident.
If you don’t have health insurance
Consider adding 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 can help extend your coverage, though they might not be a necessity.
Do you have any modifications or custom equipment?
Modifications can affect your insurance rates and coverage.
If your vehicle is modified
Consider modified car insurance, that helps cover features that aren’t covered by your standard policy.
If your vehicle is stock
Ask your provider about original equipment manufacturer (OEM) part replacements, which can provide original parts whenever your car needs repairs.
Do you have a roadside assistance membership?
This service can protect you and your vehicle if you break down.
If you don’t have one
Consider joining a motor club or ask your provider about adding roadside assistance to your policy.
If you do have a membership
You might be eligible for discounts, so ask your provider for details.
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What are your state minimums?
Every state has different requirements when it comes to car insurance. Between coverage limits and types of insurance, be aware of your state’s minimums before getting on the road.
In no-fault states, each person in an accident is covered by their own insurance company, regardless of who caused it. Because of this, many of these states require personal injury protection, a separate type of coverage designed to pay for medical expenses.
- New Jersey
- New York
- North Dakota
All other states follow the at-fault system, where each insurance company pays for damages according to the degree of fault of each party.
What’s most important to you?
While many providers seem to offer similar coverage, your experience with each insurer will be different. Consider the features that mean the most to you and how you can get the most from your premium.
- Features. Does the provider or policy offer the features you’re looking for, like roadside assistance or rental car coverage?
- Customer service. If customer service is a priority, find out if the provider has a good reputation according to friends, family and online reviews.
- Online support. Some providers allow customers to purchase coverage, manage policies, file claims, pay bills and more online.
- Price. How much are you willing to spend for coverage? Decide if you’re happy with a bare bones policy or if you want extra perks and features.
- Other types of insurance. Many car insurance providers cover home, health or life insurance and offer discounts for bundling your policies.
- Claims service. Do you prefer to file claims in person, online or by phone? How long do claims typically take to file and pay out?
- Payment options. Consider whether you’d prefer to pay by credit or debit card, check or cash, and if you want to pay monthly, twice a year or annually.
- Local agents. If you prefer having a local agent to speak with, avoid the online-only providers. Many companies offer service through agents and online — the best of both worlds.
- Financial stability. Consider each provider’s financial ratings with AM Best. While insurance companies are regulated by each state, strong financial ratings decrease the possibility of a provider failing to pay out claims.
How do I compare coverage?
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.||If you’re looking for the cheapest policy or if your car isn’t worth repairing. The minimum amount of coverage required in most states.||$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 or need extra coverage.||$50–$100|
|Personal injury protection (PIP)||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.||$50–$100|
|Uninsured and underinsured motorist coverage (UM/UIM)||Protects you in 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|
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 providers to get the best price.
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