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How Much Coverage Do I Need?

There are many options to weigh when deciding on the amount of coverage you’re going to get for your vehicle.  What you’re willing to spend will determine what happens if or when you find yourself involved in an accident. While less coverage will result in a lower monthly cost, more coverage can protect you in the event that damages occur that go beyond what the minimum insurance will cover and may end up keeping thousands of dollars or more from leaving your wallet.  Finding the amount of auto insurance coverage that’s right for you is of utmost importance when it comes to protecting your financial needs.  While it’s always encouraged to discuss your needs with a qualified insurance agent, there are a few tools you can use on your own when deciding what type of coverage you need.

Comprehensive vs. Liability Coverage

By law, most states require a minimum amount of auto insurance coverage.  This is referred to as liability insurance, or insurance that covers the costs to other parties involved in a collision. These costs include both bodily injury and property damages.  Liability insurance does not cover any injuries or damages to you or your property.

To cover the cost of damages and injuries that happen to you as well as other parties, and to cover costs in the event that you are involved in an accident with an under or uninsured motorist, you need to have comprehensive coverage.  While liability-only insurance tends to come at a lower monthly cost, comprehensive coverage can come in handy if there are high costs involved in a filed claim by helping to pay bills that come as a result of damage to your property, or if you need to see a doctor or go to the emergency room.  Comprehensive coverage can even pay for things such as a rental car for you to use while your car is in the shop, or to compensate you for loss of income due to your circumstances.  

The amount of liability insurance required varies by state.  Comprehensive coverage may result in a huge amount of savings in the event of an accident, while the monthly affordability of liability may work better for your budgeting needs.  So how can you tell what’s right for you? 

Coverage Considerations

When shopping for car insurance, you may be asking yourself, “How do I know what coverage I need?”.  There are many things that may be helpful to factor in when deciding how much coverage you’re willing to get, such as: 

The state you live in: Each state will have varying costs for insurance, that may be higher or lower at base to start out with.  (Note: insurance providers will often base their prices on statistics such as how often accidents occur within their state, population density, the average cost of insurance claims, etc.  Find out more about the factors involved in insuring a driver here).

Intended use: What are you going to be using the vehicle for? Is it a daily driver, or are you using it for work?  Oftentimes, if your car is going to be used for work purposes (such as Uber, pizza delivery, or real estate), employers will require you to have more comprehensive coverage.  

How much driving you do:  How many miles do you anticipate putting on your car?  Are you only driving it a few times a week, or only a few thousand miles a year?  Or are you driving it daily, in heavy traffic, or long distances? Insurance companies will factor in your mileage when determining the cost of your coverage.  

Your local driving conditions:  Are you living in a densely populated city, or a more rural area? What is the weather commonly like there?  Is traffic typically light or heavy where you live? 

Other drivers: In your experience, what kind of disposition do other drivers tend to display?  Are they more aggressive, trying to keep up with a faster paced lifestyle, or navigating heavy traffic? Or do they seem more calm, and more likely to keep to the speed limit?

Your driving style:  How confident of a driver are you?  How long have you been driving?  How well do you know your local area, and the local rules of the road? 

The type of vehicle and how many vehicles you are planning to cover:  Know your vehicle’s value, how many vehicles you are planning to insure, and estimated costs for repairs.

Who else will be behind the wheel: If you are planning to let others drive your vehicle, Take inventory of their stats: factors such as age, driving record, and even gender can greatly impact the cost to cover another driver.  You can find out more about insurance eligibility here.

There are many things to consider when deciding on your coverage, and ensuring you have the appropriate amount for your needs can make a big impact on your finances.  If you’re having trouble, don’t try to go it alone!  Contact one of our expert specialists today.