Have you ever wondered to yourself, How much car insurance do I need? If you have, you’ve come to the right place.
First thing’s first, you should make sure that you’re covered up to the state’s minimum coverage requirements – every state has one, so make sure to check that out.
But what about beyond that? Do you need more than the minimum required car insurance? Is it really worth the extra money?
Read on so that we can help you decide.
What Do I Need to Know About Auto Insurance?
Car insurance can be confusing because your policy can include all sorts of things that seem like they’re extra or just don’t make sense. When you take a look at your insurance policy you may see certain coverages and wonder what they are and why they’re on your policy. It helps to know what some of the common insurance terms are.
So, let’s take a look at the more common and important ones.
This just means that your car is covered if you get in some sort of accident or collision that damages the car itself. This can include anything from scraping your vehicle against a guard rail to hitting another car to running into a light post.
This covers your car in the event of some sort of damage that isn’t covered by collision coverage. If you hit a deer or a rock hits your windshield, comprehensive coverage means that you’re covered. This is the part that takes care of you when we have a flood which we all know is possible in Houston or the surrounding areas like Pasadena and League City.
Property damage is what covers you if you cause damage to someone else’s car or other property. If you’re the one at fault in the accident this is what allows you (or, more specifically, your insurance agency) to pay back the person whose property was damaged.
Bodily Injury Liability
This is what covers you in the event that you injure another person in the accident. It’s what covers the other person’s medical expenses and bills and make sure they’re taken care of.
You also may want to consider umbrella insurance as it covers over what your car insurance policy covers.
Why Do I Need Car Insurance?
Well, first of all, it’s required by law. Each state has a minimum required amount of car insurance you have to carry. But more than that, it’s important to protect yourself and your family and your vehicle.
On the less catastrophic end of the spectrum: Suppose you’re pulled over by a police officer. They ask for your license and proof of insurance and…you don’t have insurance. They could ticket you for driving without coverage!
On the more catastrophic end of the spectrum: You could truly lose everything. It can get very expensive very quickly to try and cover vehicle damage, medical bills, etc. and if you’re trying to pay for that out of pocket – especially if you’re sued – then you could run out of money very quickly.
All in all, it’s much safer and much wiser to carry car insurance to protect both yourself and your assets.
How Much Car Insurance Do I Need? State Minimums for Car Insurance
Once you’ve figured out the minimum car insurance required by your state, you can start looking into whether or not you should opt for the minimum. But remember, it may not be your best bet.
When You Can Opt for the Minimum
The minimum amount of car insurance is rarely advisable, but if you can’t afford anything more then it’s absolutely better than having no insurance at all.
Additionally, if you have no savings or assets (basically, nothing you could lose) then minimum coverage may be sufficient. You may lose if someone takes you to court to pay for an accident you cause, but you have no real assets for them to take.
You can also probably get away with the minimum amount of car insurance if you have really good health insurance. Because in the event you are injured in an accident and have to go to the hospital and rack up medical bills, you can count on your health insurance to help pay them.
But remember that this won’t help you cover medical bills you may be responsible for if you’ve injured someone else in the accident. Have you priced a new car these days? If a new car is $40,000 on the lower end or $70,000 on the higher end then state minimums won’t help you repair or replace very much of these cars. AND, what if you caused that car to run into another car and now you need to pay damage for two vehicles. Yikes!
You can also opt for the minimum when you have a car of low value. This is because when you opt for the minimum you are usually not going to end up with collision and comprehensive coverage, which are designed to cover vehicle damage.
So if your car is worth less than a couple of thousand dollars, the insurance won’t be worth it. It’s better to save the money you would spend so when something happens you can take care of the dent out of your savings account on your car.
The biggest pro to going with the minimum car insurance coverage is that it’s cheaper than any other coverage. But just remember that cheaper is almost never better.
When You Shouldn’t Opt for the Minimum
Short answer: Pretty much always.
But really, if you’re wondering, “How much car insurance do I need?” then you need to start by assessing your situation.
To find out the minimum amount of auto insurance coverage that you need (not just what’s required by your state) you first need to determine the value of your assets, including debt. You also need to decide how often you will drive your car, as this can have an impact on how much insurance you need and should carry.
Also, consider how much money you earn from your job because if you do enough damage, a judge could garnish a percent of your wages. Imagine taking home 20% less then you do today? Could you afford to lose that much out of your paycheck?
In most states, the minimum amount of car insurance required by your state isn’t actually enough to pay for serious injuries or replace a newer car. It is, quite simply, only enough to drive legally.
This means that if you end up in a major accident you could be paying for most of the expenses out of pocket – meaning you could end up losing a significant amount of your assets or personal savings.
So you want to make sure that the amount of car insurance you’re carrying is enough to cover you so you don’t end up in court losing your hard-earned savings.
Now that you know the pros and cons of getting more than the state’s minimum required insurance policy are you wondering if you should change your auto insurance policy? Or are you still wondering, “How much car insurance do I need?”
1 in 3 Americans has never reconsidered their car insurance because they thought it would take too much time. Don’t fall into that trap!
We’re here to help. Contact us for help or get a free quote now. We would be happy to review your personal insurance risks and assess your situation to be sure you are properly covered. Call KIMA at (281) 487-9686 today.