How Much Car Insurance Do I Need?

By the end of 2021, almost 290 million cars will be roaming U.S. roads. That’s more than one car per person in the country. 

A car is one of the most important items in America today. 83 percent of adults reporting they frequently drive, including 64 percent who do so daily. 

When you use an item that much, especially a big-ticket item, you want to protect it as much as possible. That’s where car insurance comes in. 

Of course, the first question that comes to mind is, “How much car insurance do I need?” That depends on many factors, including your car’s worth, where you live, what other assets you want to protect, and so on.

In this comprehensive post, we help shed light on how to determine the amount of auto insurance to purchase. Read on to learn more. 

Why Car Insurance?

For some car owners, auto insurance seems like a needless expense. The fact that auto insurance rates increase as the car ages don’t help matters. 

However, don’t underestimate the value of car insurance, especially given the prevalence of car crashes. The statistics paint a grim picture. In 2018 alone, there were over 6.7 million car crashes in America.

It could happen to anyone. Auto insurance can help cover the damages and injuries that result from a car crash in the unfortunate event that it happens to you. The costs of medical bills, property damage, and legal fees can be financially devastating for a car owner without auto insurance.

Even if you’re never involved in a car crash, there are still other threats to your vehicle that auto insurance can protect you against. These include theft, vandalism, falling objects, and extreme weather.

Almost every state, including Missouri, requires that you have a minimum amount of car insurance. Even if your state doesn’t require you to have car insurance, you’re obligated to pay for any damage caused by your vehicle. The best way to prepare for such an event is to have auto insurance.

So, How Much Car Insurance Do I Need?

To determine the amount of insurance you need to purchase, you need to first look at the different packages an auto insurance policy has. Among the most popular packages are:

• Property damage liability
• Bodily injury liability
• Comprehensive coverage
• Collision coverage
• Personal injury protection coverage

Some of these packages are mandatory, depending on where you live. Beyond the mandatory requirements of your lender or state, you can opt to buy additional coverage. Let’s look at some of these packages closely to help you determine how much insurance you need.

Bodily Injury Liability

This coverage pays for injuries that you or a family member listed on your insurance policy causes to another person during an accident. Every state requires you to buy this coverage. However, the amount may vary from one state to another.

Generally, you need to buy at least the minimum amount required by your state when it comes to bodily injury coverage. Most states require at least $25,000 per person and $50,000 per accident. If you live in Missouri, consult a reputable MO auto insurance agent to determine how much bodily injury liability you need.

Property Damage Liability

This package covers you when you or a family member causes damage to someone else’s vehicle or property in a crash.

Similar to bodily injury liability, all states require that car owners purchase this coverage. The minimum in most states is $20,000 or $25,000. 

However, it’s always best to purchase more coverage than is required by your state. Your auto insurance Missouri agent can help you determine an appropriate amount for you, depending on the assets you want to protect.

Personal Injury Protection (PIP)

This coverage helps pay for the injuries suffered by the driver plus any passengers in your vehicle during an accident. Sometimes, PIP will cover the cost of lost income resulting from injuries that were sustained in the accident.

This coverage may be mandatory or optional, depending on your state. Again, it’s always a good idea to have at least more coverage than is required by your state, considering the potential costs in the event of serious injuries sustained in a crash.

Collision Coverage

This type of coverage pays for the repair or replacement of your vehicle in the event of an accident. It’s optional coverage in all states. However, most lenders require you to have this coverage, but you can drop it the moment you finish paying off your car loan.

Of course, it’s a smart idea to purchase collision coverage, given the cost of a big repair. 

So, how much collision coverage should you purchase? That depends on your car’s worth. The insurance broker guiding you on how to choose car insurance can provide insight on how much you’ll need to pay.

Typically, expect a deductible ranging between $250 and $1,000. Your insurer is responsible for paying the remaining amount required for repair or replacement once you’ve paid the deductible.

Comprehensive Coverage

Comprehensive coverage will pay for damages to your car that result from something different from a collision. That includes a flood, a falling tree, or a fire. In case your car is stolen, comprehensive coverage will replace it.

Comprehensive coverage isn’t mandatory, although lenders may require it. You can drop it the moment you’ve finished paying off the car loan.

The amount you require depends on how much your car is worth, in case of theft. You also want to consider whether you can comfortably pay repair bills if necessary.

Choose the Right Amount of Coverage for Your Car

So, how much car insurance do I need? Different factors come into play. Once you determine the type of coverage you’re purchasing, both mandatory and optional, you can get a clearer idea of the amount you need to pay.