Deciding how much auto insurance you really need is a challenging question. Most states require drivers to purchase a minimum amount of insurance, but that could leave you financially vulnerable if you are in a major crash. Unless you drive an older car with little value and have no assets, the minimum is not enough. You need enough auto insurance to protect your finances.
The cost of additional insurance is minimal compared to how much an expensive collision could set you back. Many experts recommend that you have enough bodily injury liability coverage to cover your net worth. Other factors to consider are your driving history and the value of your car.
Legally, you can drive by purchasing the minimum coverage required for the state you live in. For most people, though, that’s not nearly enough.
The State Minimum Is Not Enough
Although you can legally drive with just your state’s minimum coverage, you should consider purchasing higher limits if you can afford it. It’s generally recommended that you purchase enough liability insurance to cover the value of your assets. For example, if your assets are worth $185,000, a 100/200/50 liability policy likely would be enough.
That is $100,000 in bodily injury liability per person, $200,000 in bodily injury liability per accident and $50,000 in property damage liability. You would need more if your net assets are more.
You also should consider increasing your liability coverage if you have any teenage drivers on your policy.
Consider An Umbrella Insurance Policy
For extra liability insurance, you should consider purchasing an umbrella insurance policy. For a relatively small amount, you can purchase an extra $1 million or more in coverage.
Aside from liability insurance, you also should consider collision and comprehensive auto insurance coverage. Collision insurance covers damage to your if you crash into another car or something on the side of the road. Comprehensive coverage covers you in case of theft, fire, falling objects, explosions or other unexpected troubles.
Collision insurance and comprehensive coverage are required in most lease contracts. Anyone who owns an expensive car should have collision and comprehensive insurance.
The agents at the Leliaert Insurance Agency can help you determine the best auto insurance coverage for you.