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How To Know How Much Car Insurance You Need

Everyone needs car insurance. The question to ask isn’t “whether or not it will come in handy,” it’s “how much is right for your specific circumstances.” Before you rush out to check auto insurance quotes from Insurance Guide or someplace similar, you need to get some idea about how much car insurance you need and what coverage is right for you. Here’s the deal…

If you’re in a state that requires car insurance as a prerequisite for operating a motor vehicle, then you’ll need to have at least enough insurance to fulfill the state’s mandatory minimums. In many cases, though, it’s good to go beyond what the state requires, in which case you’re going to need some background on the main types of car insurance so that you can competently decide what’s going to fit your individual needs.

First, let’s take a look at liability insurance. This is what pays for injuries, property damages, and potential legal defense if you’re at fault for an accident. For example, if you rear end someone, run into a mailbox, or cause a collision where the other driver sustains injury.

With the exception of Virginia and New Hampshire, you need to possess at least some liability insurance in every state, and there’s a minimum dollar amount required by your state that’s considered satisfactory. In a 15/30/5 state, for instance, you would need to have at least $15,000 for bodily injury coverage for one individual, $30,000 bodily injury coverage for multiple persons, and $5,000 for any damage to property.

It’s not uncommon, however, for the minimum amounts in your state to be insufficient in the event of a serious car accident. Therefore, it’s often best to get more than the minimum requirements in your state. You’ll want to have enough to cover the potential legal fees and medical bills that could come after a severe collision with another motorist.

Liability insurance isn’t the only type of coverage you can have. In some cases, you might consider pairing your liability coverages with uninsured or underinsured motorist insurance (UM/UMI). This type of insurance is intended to cover you in the event someone causes an accident with you, and they have either no liability insurance or not enough insurance.

Some states require this type of insurance. Others do not. In either case, if you have it, uninsured motorist coverage will pay for things like medical expenses, lost wages, car damages, pain and suffering, and funeral expenses, should it come to that.

Next up is collision and comprehensive insurance. These coverages, which are often paired together, cover a wide range of scenarios, including theft, vandalism, animal collisions, falling objects, fires, floods, hail damage, et cetera. All those things might really seem out of the ordinary, but once they happen, having coverage usually provides peace of mind.

And the same applies when you decide to get extra personal injury protection, which covers medical bills—regardless of who caused the accident. Be sure you take all of these factors into consideration, and use them to help work out how much insurance you really need.