Too Little? Too Much? What’s Just Right?
Car insurance is designed to protect you, and other drivers on the road, in the event of an accident. It is meant to pay for damages to cars, if full coverage is part of your policy. If you carry basic liability coverage, it will not cover repair costs your own your vehicle, but will cover repair costs and medical expenses associated with the other vehicle(s) in accident that is deemed your fault. As important as coverage is, it’s estimated that one in seven drivers on the road does not have any car insurance coverage at all, though basic liability insurance coverage is a requirement to legally own and operate a vehicle. That being said, however, how much coverage is enough?
Coverage Minimums Vary by State
Though every state in the United States requires drivers to carry basic liability coverage to protect them in the event of an at fault accident, each state has varying laws on how much coverage is required. Because state laws are always changing, it is best to speak to an insurance agent in your local area to determine the minimum requirements to ensure you’re legal. You can always carry more, and in cases of brand new cars, it is always a good idea to carry enough to at least cover the cost to replace the vehicle. When you finance a vehicle, the bank generally requires you to carry liability, as well as comprehensive coverage, which will cover any damage and the value of the vehicle at the time of loss.
The chart below shows what every state requires, in thousands of dollars of coverage. The numbers from left to right represent:
- Bodily injury liability for one person in an accident
- Bodily injury liability for all people injured in an accident
- Property damage liability for one accident
The yes/no represents whether or not you are required to have uninsured and/or underinsured motorist coverage on your policy. That coverage protects you if someone who drives your car is not insured, or does not carry enough insurance to cover an accident they cause while driving your vehicle.
Table of Car Insurance Minimums
Even though the state sets the minimum limit you must carry, for most drivers, it is a better idea to carry at least a bit more than the minimum coverage required by your state. Adding a few thousand dollars more in coverage amounts typically will not drastically affect your annual premium. However, if you have a high insurance rate because you’re a new driver, you’ve got speeding tickets, prior DUI charges, etc., it is better to carry the minimum amount to remain legal, and then increase your coverage when your rate decreases to normal. Your rate also depends on the car you drive, too–with older cars being less expensive, and sedans being less expensive than coupes.