How Much Car Insurance Is Enough
The minimum amount of car insurance youll typically need is state-required liability coverage. This allows you to pay for some, if not all, injuries and damages youre liable for in an accident. The most commonly required liability limits are $25,000/$50,000/$25,000, which mean:
- $25,000 in bodily injury per person
- $50,000 in total bodily injury per accident
- $25,000 for property damage per accident
However, individual state requirements vary widely your state may mandate higher or lower limits than these, while also requiring additional coverages, such as personal injury protection. If youre leasing or financing your car, your lender may require you to carry liability coverage above your states minimum limits, in addition to comprehensive and collision coverage.
Note that your states minimum car insurance requirements are just that minimal coverage. Its always a good idea to carry more liability coverage than what youre legally required to so youre not left paying the difference.
Bodily injury: 57% of Progressive customers choose more coverage than their state requires.
Property damage: 61% of Progressive customers choose more coverage than their state requires.
Use our car insurance calculator to estimate how much liability coverage, and other types of coverage, is right for you.
How To Buy Auto Insurance
Once you have decided what coverage you need, the next step is to obtain information about the cost of that insurance, including the premium, the reductions that insurers offer from the standard premium, and particular provisions in an insurance companys policy that may affect your decision to buy from that company.
Because insurance companies are not identical, it is important to obtain information from more than one company. Insurance companies market automobile insurance in two principal ways: through insurance agents or directly online with their sales staff. Agents may represent one or two or many insurers. When you contact an agency about buying auto insurance, start by finding out how many and what companies they represent. You may be able to get cost quotes from several insurers from one or two agencies. Be sure that each cost quote is for the same coverage, and reflects any discounts for which you may be eligible.
Before making phone calls or visiting insurer websites for a quote, pull together all of the information you need to get an accurate quote. Always ask for the same coverage levels for each quote so you can make an apples-to-apples comparison.
The insurer will ask about:
You want to ask the insurer for:
How To Calculate Car Insurance Before Buying A Car
When you’re on the hunt for a new car , it is essential to shop around for car insurance rates at the same time. You don’t want to find the perfect car only to find out you can afford the car payments but not the insurance.
You can estimate car insurance by using our rates by car tool to get an idea of the average rate in your state for the vehicle model you’re considering. Once your car choices are narrowed down, compare actual rate quotes for you. You can buy your new car confident that youll get the coverage you need at the best price.
Remember to check our car insurance calculator to make sure you are getting the recommended auto insurance coverages for your vehicle. You don’t want to miss out on vital protection for your vehicle by skipping coverage.
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How To Choose Car Insurance Coverage
Car insurance is not one size fits all. What’s most important to one car owner isn’t necessary for another.
That’s why it’s critical to understand the different types of car insurance, whats required by law, and what additional coverage you might need.
Insurance.com’s car insurance calculator is a quick way to find the right car insurance limits and options for you. While getting the cheapest car insurance rate is most important for some drivers, another person may want the broadest possible protection. Answering a few quick questions can help you find the best car insurance coverage for your situation.
Do You Need Comprehensive And Collision Coverage
It mainly depends on the value of your car.
Comprehensive and collision coverage are coverages that protect the value of your own car.
- Collision coverage will pay to repair or replace your car if you are at fault in an accident.
- Comprehensive coverage will pay to repair or replace your car if it is damaged outside of an accident or stolen.
If you lease or finance your car, youre most likely going to be required to hold these coverages. If you own your car outright, its up to you whether you want to add these protections and this will depend on the value of your car, the cost of coverage, and your comfort level taking the chance of paying out of pocket for these expenses, or having no coverage in the event of certain types of accidents or damage to your vehicle. According to III analysis of NAIC data, 77% of consumers purchased comprehensive and 73% purchased collision coverage in 2016.
Industry experts have their own rules of thumb for this decision:
When 6 months of collision coverage exceeds 25 percent of the vehicles value, its no longer worth it because two years of collision coverage would cost more than replacing the car.
Chane Steiner, CEO of Crediful
A general rule of thumb is your vehicle needs to be older than 10 years or worth less than $4,000 to drop comprehensive or collision.
Ava Lynch, Resident property insurance expert for The Zebra
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How Can I Save Money On Car Insurance
There are a number of ways to save on car insurance. One of the best is to shop around. But its important to understand that your driving history and other factors affect your premium.
Individuals with a poor credit score are regarded as risky investments, which can increase your premium, Dr. Pangarkar says. There are other factors that impact your insurance premium, such as the ZIP code where you live the year, make and model of your car how many miles you drive annually your age etc.
You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.
The insurance industry is highly competitive and many companies want to acquire new customers from rivals, Dr. Pangarkar says.
Here are some other ways you can save money on your car insurance payments:
- Shop around: You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.
- Look for car insurance discounts: Safe driving, getting good grades, bundling with homeowners policy and installing safety features are a few ways you can get discounts on your car insurance policy.
- Raise your insurance deductible.
Rental Car Insurance Coverage
If you have liability and comprehensive insurance for your personal vehicle, the coverage likely extends to instances when you are driving a rental vehicle in the United States. For this reason, it is likely that your existing auto insurance policy will adequately provide coverage for cars you rent within the country.
That said, other variations of rental car insurance does exist for those who need it, which we discuss in more detail in the sections below.
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Do I Need Uninsured Motorist Car Insurance
If you have your own health insurance and you have purchased collision coverage, you may be able to skip uninsured motorist coverage if your state allows it. It is a good idea to keep uninsured motorist coverages if you can afford to as it minimizes financial losses from deductibles and coverage caps.
Furthermore, getting into a crash with an uninsured motorist could spell disaster in 2019, 12.6 percent of motorists, or about one in eight drivers, were uninsured, according to a 2021 study by the Insurance Research Council.
Your state may require that you buy uninsured motorist bodily injury coverage, which pays your hospital bills if you are hit by an uninsured driver. Your state may require only that you be offered this coverage but allow you to turn it down.
You Are Legally Required To Have A Certain Amount Of Auto Insurance
Every state but New Hampshire requires drivers to have a certain bare minimum amount of car insurance.
This is called liability coverage. Liability coverage pays for the medical expenses of people you injure. It also pays for property damage like the other vehicle you hit or the fence you damaged. Basic liability insurance protects your assets from a lawsuit but it does not cover damages to your own vehicle.
In other words, if you just want to legally drive on the roads, then you need liability coverage. It protects other drivers not you. The law requires you to protect other drivers. It does not require you to protect yourself .
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The Most Important Car Insurance Coverage
The most important coverage has to be your state’s minimum liability and property damage coverage. More than anything else, you need to maintain car insurance to keep yourself legal to drive. You risk losing your driver’s license and fines driving without it. Get into an accident without liability coverage and you could be facing enormous penalties including bills from the damages you caused.
Liability and property damage coverage is there to protect the other drivers on the road from the damage you cause. Your car insurance policy probably lists liability as bodily injury 20/40 as an example. The 20 is the placeholder for how much will pay out for medical expenses, pain, and suffering per person and is valued at $20,000. The 40 is the placeholder for how much will pay out for medical expenses, pain, and suffering per accident and is valued at $40,000.
Property damage provides coverage for other people’s property. For instance, if you hit another person’s car or damage city property like a guardrail or traffic sign, your property damage coverage on your car insurance will cover the damages up to the limit listed on your policy.
Having coverage protecting other people’s property and medical expenses is important for your own financial protection. Without it, you can be sued for the damages.
What Other Coverages Are Offered
There are many types of car insurance coverage available, including:
- Umbrella Policy: If you dont think that the highest levels of bodily injury and property damage liability would be enough to protect your assets in a severe accident, you might want to purchase an umbrella policy. Umbrella policies provide a minimum of $1,000,000 in liability coverage above and beyond your standard auto insurance liability limits.
- Rental Reimbursement: Rental reimbursement pays for your rental car while your car is in the repair shop because of an insured loss.
- Roadside Assistance: Roadside assistance covers the cost of tow trucks, locksmith services or basic repairs on the side of the road.
- Non-Owner Insurance: If you dont own a car, but you still drive occasionally, you might need a non-owner insurance plan to provide liability coverage in case of an accident.
- Usage-Based/Pay-As-You-Drive Insurance: Your car insurance company can record your driving information, such as speed and mileage, and offer you discounts on your coverage for being a better driver. This may have unintended consequences, however, so its good to do your research before buying.
Other Topics You May Also be Interested
A good minimum liability coverage level is 100/300/100. Keep in mind, many insurance companies offer much higher levels of coverage, with 250/500/250 as policy options by several insurance companies across the country.
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Lower Your Rate With Discounts
Insurance can get expensive, especially if youre purchasing more than your states minimum requirements. Luckily there are ways to lower your cost.
Most insurance companies offer discounts to help reduce your premium. Common ones include multi-car, multi-policy, safe driver, and low-mileage discounts. But discounts vary between insurers so be sure to shop around and ask about which ones are available.
How Much Car Insurance Should You Really Have
Up to this point, weve focused exclusively on how much car insurance youre required to have.
However, theres a big difference between maintaining the minimum required car insurance requirements and maintaining the recommended car insurance limits.
So how much car insurance should you really have?
Heres one of the most important things to consider:
- If youre young and you have no assets to protect, then buying car insurance with high liability coverage limits may be unnecessary. In this situation, it would be pointless for the other party to sue you.
- If youre older and have a home and savings, however, then you may want to buy additional liability insurance. You have more assets that could be affected by a lawsuit.
Lets say you only have $10,000 in liability coverage. You hit an SUV filled with a family. The damage to the vehicle exceeds $50,000. Each family member has over $30,000 in medical bills. Your insurance company will happily cover the first $10,000 in damages but youll need to pay the remaining amount out of pocket. That means tens of thousands of dollars of damage that youre legally required to cover.
To avoid this situation, some drivers will buy car insurance policies with $1 million or $2 million in coverage. In fact, some insurance experts only recommend car insurance policies with at least $1 million or $2 million in coverage.
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If You Need To Drive A Vehicle For A Short Period You May Be Thinking About Getting Temporary Car Insurance
Major insurers typically dont package temporary car insurance as a separate policy type. But options are available if youre looking for car insurance coverage spanning less than six months.
This type of coverage may be valuable in certain situations. For example, maybe you dont typically drive when youre at home but are planning to drive on a visit somewhere else. Read on to learn about temporary car insurance.
Optional Car Insurance Coverage Types
Liability insurance, uninsured motorist coverage, medical payments, and collision and comprehensive insurance are a good foundation for a car insurance policy. But you might need a few additional coverage types to fill in some gaps. Here are some to consider.
- Gap insurance. If your car is totaled due to a problem covered by your policy, such as a car accident or fire, gap insurance covers the difference between the actual cash value of your car and how much you owe on the loan or leases. For example, if you have $15,000 outstanding on your loan but your cars value was $13,000, this coverage pays the $2,000 gap.
- Rental reimbursement insurance. If your car is being repaired due to a problem covered by your policy, this coverage pays for a rental car or substitute transportation, such as train and bus fare, during repairs.
- Roadside assistance insurance. If your car breaks down or you run into another problem , this pays for service like a tow truck, jump-start, fuel delivery or a locksmith.
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Types Of Car Insurance Faq
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What Are Washington Auto Insurance Requirements
All states have automobile financial responsibility laws. These laws ensure that victims of car accidents are compensated by at-fault parties. You can fulfill financial responsibility laws in a few ways, but the easiest way is by purchasing car insurance that meets state minimum requirements.
In Washington, you are required to carry liability insurance in the amounts of 25/50/10. Heres what that means:
| Requirement | Details |
|---|---|
| $25,000 Bodily Injury per Person | Covers medical bills, lost wages, and death benefits for other parties in accidents you cause up to a maximum of $25,000 per person |
| $50,000 Bodily Injury per Accident | Covers medical bills, lost wages, and death benefits for other parties in accidents you cause up to a maximum of $50,000 per accident |
| $10,000 Property Damage | Covers car repairs and property damage for other parties in accidents you cause up to a maximum of $10,000 per accident |
When you purchase auto insurance in Washington, you will have a few more standard coverage options that arent required but can be good to have:
If you get caught driving without car insurance in Washington, you could be fined $550 or more. Also, if you cause an accident and dont have insurance, you could have your license suspended.
In Washington you have a few more ways of satisfying the states financial responsibility laws, according to the WADOL:
In each of these scenarios, you would compensate accident victims with your own money rather than relying on an auto insurance company.
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