How Much Auto Insurance Coverage Is Enough?

Short Answer: Check your state’s minimum requirements, your lender’s requirements if you have financed your car, what is the value of you car and how much you can afford. Auto insurance coverage you need would depend on all these factors. Each year thousands of new drivers take on the road. New cars, new drivers means car insurance is the top most priority. Although, we do consult our more experienced friends with regards to the level of coverage we need to buy, but at times it gets frustrating because car insurance premiums are based on individual needs, age group, type of car and your location. Although, premium and coverage are interlinked, we get confused when it comes to prioritizing between the two. You ultimate aim is to get the cheapest deal without compromising on the coverage. So, how should you decide and achieve the balance between the two? Before we answer this question, it would be beneficial if you know how does car insurance actually work.


How Much Auto Insurance Do you Need

How much auto insurance you really need is related to factors affecting your car insurance rates. could be answered by knowing the minimum liability coverage requirements in your state plus how much is the average car insurance premium in your state. You can click here.

Once you go through the questions mentioned below, you would be in a better position to decide the coverage amount which should suffice you car insurance requirement.

  • What Is The Minimum State Requirements In Your State:Click on the map below to get the information on minimum state requirements (auto insurance). Please note that buying minimum state requirements as far as car insurance is concerned has no relation to the amount of coverage you require. It is NOT the single most deciding factor. There are other factors as well (discussed below). These limits will give you a fair amount of idea on the minimum threshold which is mandatory before you get in the driver’s seat.

How To Read The Map:—> If you live in the state of New Jersey, you would see a number as 15/30/5. Which means that you need $15,000 minimum liability coverage for injury to one person. $30,000 for all injuries and $5,000 for property damage done in an accident.


  • Have You Purchased Your Car On Finance:If yes, then your lender will mostly require you to have comprehensive and collision coverage on your car insurance policy along with higher deductible amount. Both these factors will increase your premium because you are looking at much higher coverage when compared to minimum state requirements. There is an important relationship between your car insurance and the car financier which should be mentioned in the policy documents.
  • What Type Of Car Do You Use (Value Of Your Car):In simple terms, what asset are you trying to protect? Is it a new car or a used one. Each car model falls in a specific category for car insurance companies to decide on your premium. This indirectly affects your coverage amount as well. While assessing your car’s actual worth, keep in mind that the coverage does not exceed the actual value of the vehicle.
  • The Affordability Factor:This is important. Once you meet the threshold of minimum state liability coverage requirements, you need to be cautious that you do not go over board when it comes to paying more by getting the unnecessary coverage. If you cannot afford higher premiums then you might choose high deductible amount. Once you do, you need to ensure that when the time comes, you are able to afford your premiums as well as high deductible amount.
  • Driving Habits – How Often And How Far You Drive:How much and how frequently you drive would also determine your coverage amount. The more time you spend on the road, more risk you carry when it comes to car accidents. This will surely impact your premium and your coverage amount.
  • Is Comprehensive And Collision Coverage Necessary For You:If you will be using a used car or an old vehicle then it would make sense to drop off the comprehensive coverage from your policy and this will reduce your coverage and lower your monthly premium. As discussed above, if you have financed your car then the only option you might have is to have this type of coverage. Moreover, as an added cover of security, you might want to purchase gap insurance as well.
  • Your Age, Gender And Marital Status Will Also Play A Major Role In Deciding Your Coverage:

If you are young and single (below age 25) then it may not be easy for you to find cheap car insurance for young drivers. However, when it comes to deciding on the coverage amount then the decision should be a snap easy one. If you are single and do not drive a new car then just purchasing minimum liability coverage in your state should be fine. If you drive mostly with your family and kids then you might want to buy extra coverage.


Bare Minimum Liability Insurance Coverage On Car Insurance Policies


To be honest, the bare minimum liability insurance requirement in no way justifies the amount generally required to compensate for accidental damage to life and property is much higher than what is minimum requirement. You should buy as much liability coverage as you can afford.

As an example: Buying a minimum of $100,000 of coverage for injury to one person, $300,000 of coverage for all injured persons in an accident and minimum of $50,000 of coverage for any property damage is ideal irrespective of what your state minimum requirements are.

If your only aim is to cut cost, then buying bare minimum car insurance might be the best option. It is certainly better than not having car insurance at all, which is an offense.

There are other coverage’s as well which you might suit your requirement like:

Uninsured/Under insured Coverage and Full Auto Glass Coverage. All these are optional but cannot be neglected. End of the day you need expert advice from an experience insurance agent to help you out in deciding the right amount of coverage.

On an average, car accidents would easily cross $100,000 plus in damages. If you are involved in an accident and if found guilty of being at fault then you will have to pay for damages. Hence, you need to ensure that you have enough coverage. Also, it would be good to know if your area has high accident rates.

Leave a Reply

Your email address will not be published. Required fields are marked *