How Much Car Insurance Do I Need

Every state requires drivers to carry automobile insurance. The minimum amount and types of coverage you need to purchase vary from one state to another. When buying car insurance keep the following types of insurance in mind.

Liability Insurance

This part of the policy is responsible for paying damages that you cause to someone else while operating your vehicle. It consists of two types: bodily injury and property damage.

Bodily injury pays for medical expenses for anyone injured in an accident that you are deemed responsible for. It also covers your legal fees if you are sued. It does not pay for injuries to you or anyone else on the policy, but it will pay medical expenses for your passengers as long as they aren’t listed on the policy.

The second type, property damage liability, pays for damage to property you damage while operating your vehicle, except your car. It is usually for the other person’s vehicle repairs, but can also pay for damages to building, lawn, or other personal property. The minimum requirement differs by state. Keep in mind medical expenses can be quite hefty in some cases, which might make you want to consider purchasing more than the state minimum.

Physical Damage

The two types of physical coverage protect your vehicle if you’re in an accident and you’re at fault. Collision coverage pays for car repairs from hitting another car or an object. If your vehicle is declared a total loss, you’ll be reimbursed for the amount the insurance company assesses the vehicle for. Your policy requires you to choose a deductible, which is the amount of money you must pay before insurance covers damages. A higher deductible costs you less on a monthly basis, while a lower deductible policy will cost more.

Personal-Injury-Protection (PIP)

Personal Injury Protection (PIP) pays for 80 percent of your medical expenses regardless of who is at fault. It also includes lost income and death benefits, which can usually be declined if you choose for a lower premium. Your deductible also determines how much you pay. You can increase how much coverage you purchase if you want better protection.

Uninsured / Underinsured Motorist

Uninsured motorist coverage protects you if someone who doesn’t have insurance causes an accident that you’re involved in. It pays for damages to your property, and makes up for the difference if the other individual has insurance, but not enough to cover all expenses.

A comprehensive collision is the second type of physical damage coverage and pays for damages to your vehicle from something besides a collision such as theft, vandalism, animals, or acts of nature such as a tree falling. Most people purchase both types of physical property damage for maximum protection. This type of coverage isn’t required by law but is necessary if you have a loan or lease on the vehicle to protect the dealer from losses. You must carry both comprehensive and collision until you’ve paid off the loan.

Minimum insurance requirements may not be adequate to protect you, your passengers, or your property. Always purchase at least the state requirements, but evaluate your situation and determine if you need more coverage to adequately protect yourself.