How Much Auto Insurance Coverage Do I Need?

How much auto insurance coverage is enough? That depends on how much insurance you legally need to drive in your state and how much coverage you actually want for your vehicle. How much auto insurance coverage you need can be determined by the age of your vehicle. You may want less coverage on an older vehicle when the cost to repair it would be more expensive than what the car is worth, but you may want more coverage for a brand new vehicle. Read this guide for more information to help you choose how much car insurance coverage you need.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Mar 30, 2021

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Whether you just bought a shiny new automobile, or have recently switched states, now is the right time to search for the best auto insurance available. As I’m sure you know, cheap doesn’t necessarily mean good. You should be looking for the auto insurance package that fits your needs.

Every single driver has different coverage needs, budgets, and options available to them. This means there is no one right answer that fits everybody. To really know and understand how much auto insurance coverage you need, you must analyze your current situation, weigh your options, and then make an educated decision. Only after you have done your homework on the coverage you actually need can you make the best choice for yourself. You’ll also need to know what you can afford, as deductibles play a huge part in determining insurance cost.

Going through the steps below will prepare you to make the right decision before you enter the maze of information necessary to obtain a quote. Once all the great auto insurance deals are in front of you, you’ll want to make an unbiased choice, rather than letting all the quotes tempt you. To avoid confusion, it’s important to figure out your auto insurance needs beforehand.

List The Coverage You Have, Want, And Need

First, you should make a list of everything you already have insured. Do you already have comprehensive personal health insurance? Is your house already insured? Knowing what is already insured will help you in this process, as you do not want duplicate coverage when buying your auto insurance.

This is the first step, and it should be done before you go online to hunt for a good quote. Knowing what you need before searching for the insurance package that offers the best price will enable you to make a better decision. Without going through this step, you might be tempted to pick up the cheapest offer, possibly wasting good money.

Alternatively, you may decide to transfer your homeowner’s insurance to the same company who will be insuring your car. By bundling your policies, you should get reduced premiums for both your homeowner’s insurance and auto insurance.

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Knowing About Coverage Limits

When you go to buy liability coverage, you might see your limits listed as, 100/300/50. A 100/300/50 liability policy is one of the more common auto insurance policy structures and is also the limits that most insurers currently recommend for liability coverage. The first two numbers represent bodily injury liability coverage. The third number represents property damage liability coverage. What this means is that, if you are in an accident and are deemed to be at fault, your insurance policy will pay up to $100,000 in injuries per person, $300,000 in injuries per accident, and $50,000 in property damage per accident.

While the recommended limits of 100/300/50 should be more than enough for most people, it might not be enough for higher net-worth individuals. A good rule of thumb is to make sure you’re covered for an amount equal to the total amount of your assets. If your savings, investments, and property value total over $2 million, for example, you will probably want to increase your coverage limits or purchase an umbrella coverage policy. By being covered up to the value of your personal assets, you can still protect your assets if you cause a significant amount of monetary damage.

Considerations For Older Vehicles

The cost of maintaining older vehicles is rising. Aside from the higher probability of breakdowns, less efficient safety features, and higher repair costs, older vehicles are also easier to steal. If you own an older car, you probably don’t want to have more coverage on it than your new vehicle. The reason for this being that older cars are worth much less. You might even consider dropping collision coverage on your old car.

According to a scientific study, cars that are more than 20 years old are most vulnerable to theft, followed by those between 14 to 20 years old. As such, liability insurance is just not enough on older cars. Consider purchasing comprehensive coverage to cover any potential monetary losses from car thefts.

To determine whether you need comprehensive coverage, ask yourself this: will you be trouble financially if you have to front the cost of replacing a stolen vehicle? If you say “no” to this, you will be fine just purchasing the basic liability coverage. However, for those of you with less financial security, it will be a good idea to include comprehensive coverage in your auto insurance package.

Indeed, many owners of older cars either overestimate or underestimate the actual worth of their vehicle, resulting in either overpaying for their auto insurance or having to pay for the cost of a new car when their old car gets stolen, and they need to replace their vehicle.

Things To Think About In Regards To Family Coverage

Don’t forget to insure others in your family! Anyone who lives under the same roof as you is eligible to be part of your family plan. There’s no reason not to cover your entire family under one auto insurance plan, and when more people are covered under one policy, you will get more discounts on your auto insurance premiums.

If your family has more than one vehicle, you can get discounts for insuring multiple cars on one insurance policy. Also, the owners of the other vehicles won’t have to deal with the hassle of all the paperwork that is involved in obtaining his auto insurance: you will have already done it for them. For more policies that you can combine with your auto insurance to create benefits for you and your family, check out our article on combining and bundling different insurance products.

Don’t forget that there are many different kinds of auto insurance coverage, which you can read up on right here on Most people only need state required insurance, which is liability coverage (and sometimes uninsured motorist protection), but others will have special needs that require other forms of auto insurance.

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How Much Of A Deductible Do I Need?

Another thing to take note of when buying auto insurance is your deductible. As you already know, a deductible is the amount you need to contribute to paying for repairs on your car should something happen to it. The auto insurance will not simply pay to repair all the damages itself. For example, if you have incurred $3,000 in damages in an accident, and your deductible is $1,000, you will be required to fork out $1,000 while your insurer pays the additional $2,000. Therefore, when buying insurance, you part of the decision-making process is determining what deductible you are willing to pay.

The insurance policy will also include how frequently you need to pay the deductible. For instance, if you get into two accidents six months apart, will you have to pay the deductible for both? Or will the second one be paid for entirely by the insurance company? Premiums decrease as the deductible increases, so if you are a safe driver, and can afford it, a high deductible may save you money. Conversely, if you regularly incur minor damage to your car, a lower deductible and higher premiums may be a better choice.

To keep auto insurance premiums at a minimum, it’s best to choose the highest deductible you can afford. But don’t set it too high. If you can’t afford to pay your deductible when the time comes, you may be in trouble. Learn more about choosing your deductible limits here.

Choosing An Automobile Insurance Policy With The Right Coverage

Once you have thought through the questions asked here, you are properly prepared to choose the auto insurance with the best coverage for you. To get started with some quotes, enter your zip code above. After answering a few short questions, you will be presented with quotes from a wide variety of insurance companies based on your needs and specifications. As all of our quotes come from the top providers in your area, there is a good chance you’ll get connected with a policy you like with the coverage you need.

Additional Resources To Look At

  • Dave Ramsey – How Much Auto Insurance Does Dave Ramsey Recommend?
  • The Wall Street Journal – How Much Car Insurance Do You Need?
  • Edmunds – Auto insurance: Laws Require Minimum Coverage, But Do You Need More?

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