How much auto coverage you need depends on several factors. Being educated about these factors will help you choose the right policy with the right coverage limits.
The kind of car you have
What kind of car you have, how old it is and how much it’s worth all play a role in how much insurance coverage you should have. For example, if you have a brand-new car that is financed, then you need to have full coverage, including collision, comprehensive and uninsured motorist coverage. On the other hand, if you drive an old clunker that’s only worth a few hundred dollars, you probably only need the minimum liability coverage required by your state.
The laws of your state
Each state has different laws regarding how much coverage you need to have, especially when it comes to liability coverage and personal injury coverage. One state may only require you to carry $50,000 in liability coverage, while another state may require you to carry $100,000. Your auto insurance company should make sure you buy at least the minimum coverage, but if you move to a different state, you may need to adjust your policy.
Your personal situation
One factor in how much auto coverage you need is your personal financial situation. If you have a lot of assets that could be at risk in the event that your liability for a crash exceeds your insurance coverage, then you might want to consider getting a more substantial insurance policy than you might otherwise.
Where you live
One coverage that many people are unfamiliar with is comprehensive coverage. This is the insurance coverage that pays for damages from something other than a collision, such as wind damage, fire or theft or vandalism. If you live somewhere where tornadoes, hurricanes or earthquakes are common, you probably need comprehensive coverage. You also probably want a comprehensive policy if you cannot keep your car in a covered parking structure or garage to protect it from the elements.
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