How Much Coverage You Should Buy

The minimum amount of coverage that you need is not actually up to you. Almost every state has requirements for minimum liability insurance coverage.

Once you have made sure that you have at least the minimum coverage requirements, you should consider how much more coverage you will need. Unless you are involved in nothing more than a small fender bender, you can almost guarantee that the total cost of damages to your car and the other person involved in the accident will exceed the state’s minimum coverage requirements. Even if you’re a near perfect driver with a sparkling record, you can never guarantee what other drivers will do on the road, so you should make sure you’re protected. If you are found liable for more than your insurance covers, or if you are hit by an uninsured driver, you could have to pay the remaining damages out of pocket.

To determine how much coverage you need, talk with your insurance agent about recommended liability limits or an umbrella or excess liability policy, which will pay for damages after your basic coverage is exhausted. These policies usually cost only about $200 to $300 per year, but they can offer millions of dollars in coverage. That’s a lot of protection and a lot of peace of mind!

Before you start looking at another company to extend your insurance coverage, make sure you always inquire with your current insurance company first. It will be much easier to extend coverage with a company with whom you have an established history.
Beyond liability coverage, you should also consider collision and comprehensive coverage for added protection. Coverage limits for these policies will be non-negotiable as limits will be based on the actual cash value of your car and the cost of repairing it.

Finally, no matter what limits you choose or what policies you select, you will have to decide on a deductible to determine your final premium amount and your monthly rates. Your deductible is how much you must first pay for damages before your insurance company will pay the rest of the damages. Deductibles are usually $500 to $1,000, and the higher your deductible, the lower your premium will be. Don’t be tempted to make your deductible as high as you can to lower your monthly bill: You will have to pay it first if you get in an accident, so only select a deductible for an amount that you have readily available in your savings.

Buying car insurance can be a hassle, but it is worth it. Get cheap car insurance by searching online for the perfect quote.