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How Much Car Insurance Do I Need?

No two auto insurance policies are the same, so find out what’s right for you.

With all of the different types of auto insurance options available, it may be difficult to decide which are best for your budget and lifestyle. As it turns out, there’s no standard, one-size-fits-all policy – coverage depends on each driver’s needs. As you’re finalizing your choices, ask yourself these questions.

How much liability insurance is enough?

In almost every state, drivers are required to have a certain amount of coverage – known as minimum liability insurance – to legally drive a car. However, the minimum required liability limits might leave you out of luck in some liability scenarios. Amica’s minimum recommended car insurance coverage is 100/300/100 for liability insurance coverage. This means you’d have a maximum limit of $100,000 of bodily injury coverage per person, a maximum limit of $300,000 of bodily injury coverage per accident, and a maximum limit of $100,000 of property damage coverage per accident. These numbers are called split limits, because the total liability is split into three sub-limits. You can also have a single limit of liability. If you had a single limit of $300,000 car liability insurance, $300,000 would be the most in damages that would be paid for bodily injury and property damage for any one accident.

To figure out the amount of coverage you need, you’ll want to consider what assets you have to protect – like homes and other valuable possessions. If you cause an accident and your policy doesn’t provide enough coverage to pay for the damage, your financial assets could be leveraged to help make up the difference. Check out our article, Understanding Coverage: Part 1 – Liability Coverage, to learn more about what’s covered under car liability insurance.

Should I get collision and comprehensive coverage?

If you own a vehicle you’d want to repair if it got damaged, collision and comprehensive are a must.

Collision car insurance covers damage to your vehicle that occurs from impact with another vehicle or object. Accidents happen. To avoid paying for them out of pocket, carrying collision coverage may be in your best interest.

Comprehensive coverage, also known as other-than-collision coverage, pertains to physical damage to your car from fire, theft, vandalism, falling objects and more. Often, these losses are out of your control, so carrying comprehensive coverage can help cover the unexpected.

There isn’t necessarily a recommended car insurance coverage amount when it comes to collision and comprehensive coverage. However, if your car is leased or financed, you may be required to carry these coverages at a certain deductible by your lienholder. Check with them to see if they have any coverage or deductible requirements. 

Read our article, Understanding Coverage: Part 2 – Comprehensive vs. Collision, for more information about collision and comprehensive coverage.

What do I want for my deductibles?

If you choose to carry collision and/or comprehensive coverage, you’ll need to select a deductible for each coverage. The deductible you choose is an easy way to tailor your insurance policy to your budget and lifestyle. When wondering what deductible to choose, know that what you’re really deciding is how much you can afford to pay out of pocket if you need to file a claim. For example, you have a $500 deductible for comprehensive coverage and your car is in a hail storm. The total damage to your car is $5,000. You would pay your $500 deductible toward that damage to your vehicle, and your insurance carrier would pay the remaining $4,500. 

A lower deductible is usually paired with a higher monthly premium, but you won’t have to pay as much toward a claim before your insurance takes over. This may be a better option if you prefer to have a smaller out-of-pocket expense when filing.

A higher deductible is usually paired with a lower monthly premium. If you want to pay less each month and you can assume the financial risk of having to pay the higher deductible before your insurance takes over, this may be the right choice for you.

What about uninsured and underinsured motorist coverage?

If you get into an accident where the other driver is at fault, there’s no guarantee that they’ll have sufficient insurance to cover your medical and property damage bills. That’s where uninsured and underinsured motorist coverage comes in: It protects you from having to pay from your own pocket if the other driver’s policy doesn’t cover all of your damages. For example, if you’ve experienced an injury that’s worth $100,000 and the other driver, who is at fault, only has a $50,000 bodily injury limit, you would be able to recover [the difference] from your underinsured motorist coverage, up to the limits of your policy. For these reasons, uninsured and underinsured motorist coverage is recommended. Some states require uninsured motorist coverage, so be sure to check with your insurance company before you make a final decision.

When it comes to the recommended car insurance coverage for uninsured and underinsured motorist coverage, Amica recommends carrying the same limits as your car liability insurance; therefore, at least $300,000. To learn more about uninsured and underinsured motorist coverage, check out our article, Understanding Coverage: Part 3 – Uninsured and Underinsured Motorist.

What’s the right amount of coverage for me?

Getting back to the question of, “How much car insurance do I need?” the exact coverages you need depend on your unique situation. An Amica representative would be happy to discuss your situation and help make sure you’re covered from all angles. 

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