How Much Car Insurance Do I Need?

The right amount of car insurance often depends on how much financial risk you’d want to handle yourself after an accident, theft or major repair. As you review your options, the following questions can help you choose coverage that fits your life.
 

Quick takeaway: For many drivers, the goal isn’t just meeting the minimum requirement. It’s choosing coverage limits and deductibles that can reduce financial strain after a covered loss.

How much liability insurance is enough?

In almost every state, drivers are required to carry a minimum amount of liability insurance. But minimum limits may not go very far if you cause a serious accident. It may help to think beyond the legal minimum and focus on what could happen if injuries or property damage costs add up quickly. Amica’s minimum recommended car insurance coverage for liability is $100K/$300K/$100K. That means up to $100,000 for bodily injury per person, up to $300,000 for bodily injury per accident and up to $100,000 for property damage per accident. These are called split limits because the liability protection is divided into three parts. Some policies use a combined single limit, where one total amount applies across bodily injury and property damage for a single accident.

Important: If you cause an accident and your policy limits aren’t high enough, you may be responsible for the remaining costs yourself. For a deeper look at what liability pays for, read “What Is Auto Liability Insurance?”

Example: How liability limits can affect what you pay

Customer examples can make this easier to picture. Imagine you cause an accident that injures two people and damages another vehicle. If the total costs are higher than your liability limits, insurance may only pay up to those limits, and you could be responsible for the difference.

If you want even broader protection against large liability claims, you may also want to explore personal umbrella insurance.

Should I get collision and comprehensive coverage?

If you own a vehicle you’d want to repair or replace after damage, collision and comprehensive coverage are worth serious consideration.

Collision coverage helps pay for damage to your vehicle after impact with another vehicle or object. If you hit a guardrail, back into a pole or are involved in a crash, collision coverage may help you avoid paying the full repair bill out of pocket.

Comprehensive coverage, also known as other-than-collision coverage, helps with damage from events like theft, vandalism, contact with an animal, falling objects, fire and certain weather losses. These are the kinds of risks you generally can’t control, which is why this coverage can be valuable even for the most careful drivers.

There isn’t one recommended car insurance coverage amount for collision and comprehensive because the right choice often depends on your car’s value and your finances. If your car is leased or financed, your lender may require both coverages and may even require a specific deductible. If your car is paid off, ask yourself whether you could comfortably repair or replace it on your own if it were stolen, totaled or badly damaged.

Need more details? Read “Comprehensive vs. Collision Insurance”

When full coverage may make sense

Many drivers use the phrase “full coverage” to mean a policy that includes liability, collision and comprehensive coverage. It’s not a formal coverage type, but it can be a helpful shorthand when you’re deciding how much car insurance you should have.

• A newer or higher-value car may be worth protecting with collision and comprehensive coverage.
• A financed or leased car often requires these coverages.
• An older car with low value may not justify the premium if you could replace it yourself.

What do I want for my deductibles?

If you choose collision and/or comprehensive coverage, you’ll also need to choose a deductible for each one. Your deductible is the amount you pay out of pocket on a covered claim before your insurance helps pay the rest. In practical terms, choosing a deductible means deciding how much of a repair bill you could comfortably handle yourself. For example, if you have a $500 comprehensive deductible and hail causes $5,000 in covered damage, you’d generally pay the first $500 and your insurer would cover the remaining $4,500.

A lower deductible is usually paired with a higher premium, but it means less to pay if you file a covered claim. This may make sense if you want to avoid a larger out-of-pocket expense after an accident or weather-related loss.

A higher deductible is usually paired with a lower premium. That may work well if you have emergency savings and would rather keep monthly costs lower. 

 If you want help thinking through this trade-off, read “How Do Car Insurance Deductibles Work?”

What about uninsured and underinsured motorist coverage?

If you’re hit by a driver who has no insurance or not enough insurance, you could still face medical bills and repair costs even when the crash wasn’t your fault. That’s where uninsured and underinsured motorist coverage can help. For example, if you have $100,000 in covered costs due to your injuries and the at-fault driver only has $50,000 in bodily injury liability coverage, your underinsured motorist coverage may help cover the difference, up to your policy limits. For that reason, this is often recommended coverage, and in some states it’s required.

When it comes to recommended car insurance coverage for uninsured and underinsured motorist protection, Amica recommends carrying the same limits as your liability coverage, therefore at least $300,000 per accident. To learn more, read “Uninsured and Underinsured Motorist Coverage”.

Other coverage options worth considering

Depending on your situation, you may want more than the core coverages above. These options can round out your policy:

• Medical payments coverage or personal injury protection or Personal Injury Protection for medical expenses for you or other occupants of your vehicle after an accident.
• Roadside assistance if you want help with common breakdown issues.
• Gap insurance if you owe more on your car than it’s worth.
• Rental car reimbursement coverage if you’d need temporary transportation after a covered loss.

What’s the right amount of coverage for me?

Getting back to the question, “How much car insurance do I need?” the right answer depends on your unique situation. In general, think about these four areas:

1. Your legal requirements: Start with what your state requires.
2. Your assets: Higher liability limits may make sense if you have more to protect.
3. Your vehicle: The more value your car has, the more likely collision and comprehensive may be worth it.
4. Your budget: Choose deductibles and optional coverages that fit what you could realistically handle after a claim.

Comparing quotes? Make sure you’re comparing the same limits, policy duration, deductibles and optional coverages. “How to Compare Car Insurance Quotes” can help with that. You can also explore “Car Insurance Policies”, “Car Insurance Coverage Options” and “Car and Home Insurance Bundle” if you want to review your options more broadly.