Get a Free Quote!

Pick the Right Coverage

Car insurance isn’t one size fits all. It is customizable so that you can tailor the types and amounts of coverages in your policy based on the value of your car, how often you drive, and what your assets are. But in the end, it all comes down to paying for a policy that will fully protect you when the time comes.

There are six major coverages that auto insurance policies can include, and each one serves unique purposes. They provide liability in the event you cause damage to a person (bodily injury liability) or property (property damage liability); if you’re not at fault, they protect you if the other driver does not have enough insurance to cover your damages (uninsured or underinsured motorist coverage); they cover repairs to your car when you cause a crash (collision coverage) or any other type of damage not resulting from a collision (comprehensive coverage); and they cover your medical bills or lost wages if you’re injured in a crash (medical payments or personal injury protection). Some, but not all, of these coverages might be required by your state, which also sets minimum requirements on how much you should buy. You can check with your state’s Department of Motor Vehicles to find out what your requirements are, but here are some general guidelines for what – and how much – you need.

Having Enough Liability Coverage is Key

Ask any insurance expert, and he or she will likely say that the most important part of your policy is liability. If you cause an accident, liability will protect you from potentially crippling repair and medical bills, as well as lawsuit costs. In fact, liability is so important that it is required by every state except for New Hampshire. It’s also important to make sure that you have enough liability coverage. State body liability minimums can range from $10,000 to $50,000 per person and $20,000 to $100,000 per accident. This means that if you caused an accident, your insurance would cover you up to that amount, and you’d be responsible for anything after that. Of course, an accident may well exceed these minimums, and car insurance experts recommend buying more than what your state requires, even if it means paying more for your premium.

“You can pay the least amount of money by getting the minimum, but it might not be sufficient for your coverage and you could put your other assets at peril,” said Mike Barry, spokesman for the Insurance Information Institute (III). “You should definitely consider paying more than the state’s required minimum.”

The III recommends that you carry at least $100,000 of bodily injury protection per person and $300,000 per accident, though you should work out specifics with your insurer. If you own your home, you would need more liability coverage than someone who rents, for instance. People with high net-worths might benefit from a separate umbrella policy to fully cover their assets, too. Similarly, you should also consider buying more than your state’s minimums for property damage liability. Most states require between $10,000 and $25,000, though that probably won’t be enough if you collide with a car worth more than those minimums. Consumer Reports recommends buying coverage of $100,000.

Optional Coverages To Consider

In addition to liability coverage, some states may also require that you purchase uninsured or underinsured motorist coverage, but even if your state doesn’t require this coverage, it is strongly recommended.

“A lot of studies out there put it at upward of one out of every seven drivers are uninsured,” said Barry. “This [coverage] is going to cover you in the event you’re hit by an uninsured or underinsured or hit-and-run driver.”

Drivers usually get the same amount that they have in bodily injury coverage, though that may vary based on the value of your car.

Collision and comprehensive are also two other coverages that may or may not be required by your state, but if you have a car loan, most lenders require that you have these coverages. If they’re not required, of the two, comprehensive coverage is highly recommended because of the range of damages it covers.

“Comprehensive coverage comes into play a lot of times. If the car’s partially flooded, comprehensive covers it. If car is hit by a fallen tree, it covers that, too,” said Barry. “And these things happen quite frequently.”

Collision coverage, on the other hand, might not be necessary, especially if you have an older car, said Barry. A good rule of thumb to follow is if the cost of this coverage equals 10% of your car’s Kelly Blue Book value, you might want to do without it. For both comprehensive and collision coverage, the amount you buy is determined by the market value of your car and the cost of repairing it.

As far as medical payments or personal injury protection goes, you probably won’t need the coverage if you have separate health, life, and disability policies that cover similar damages, such as medical bills, lost wages, and funeral costs. Keep in mind, though, that some states may require drivers to purchase personal injury protection, and that even if you’re covered, you may need to protect yourself from passengers who don’t have their own health care coverage.

In addition to the major coverages mentioned, there are other items that could be included in your policy. Even though they’re likely to increase you premium, you should strongly consider adding these perks if you think you’ll need them. Roadside assistance is one such coverage, and it pays to have your vehicle towed. However, if you already have an auto club membership, or your car’s manufacturer provides this service for free, you don’t need to buy this extra coverage. Rental reimbursement is another extra that you may need. It covers the cost of renting a car in the event yours is stolen or in the shop, usually up to a certain amount.

When You Can’t Get Coverage

For some drivers, getting coverage at all, let alone making sure they have enough, can be an issue. Drivers labeled “high-risk” may find that they are unable to get auto insurance through private insurance companies. A high-risk driver may be someone who has a poor driving record, has filed many claims, has several DUIs, owns a high-performance car, has not driven very long, has no insurance record, or lives in an area that has high incidences of theft and vandalism. In that case, you should look to see if your state has an assigned risk pool, wherein each insurer must accept the motorists assigned to it.

Generally, these policies have premiums that are much higher than those offered by a private insurance company, but at least then you’ll have coverage. Drivers with bad driving records, high-performance cars, or who live in areas with high levels of crime may also be able to get insurance through private insurance companies that specialize in high-risk drivers. You can check your state’s insurance department’s website about either of these options.

Your Changing Coverage Needs

There are several cases where your insurance needs may change, requiring more – or less – coverage than you currently have. If you move, especially to another state, your premium could be affected by the area you live in. If you change cars, your premium likely will also change if the car is of greater or lesser value than the one you previously owned. If you pay off your car, you may consider eliminating collision coverage. And if your assets change – you move into a new home, have a significant salary increase, or come into an inheritance, for instance – you’ll want to reevaluate your policy to make sure your liability coverage is fully protecting you.