Auto Insurance Coverage

How Much Auto Insurance Coverage Do I Need?

With so many options for auto insurance coverage, how do you figure out what best suits your needs? After you have selected coverage that fulfills the minimum auto insurance requirements, there are still many choices, as the mandatory requirements leave room for out-of-pocket expenses.

Liability for Bodily Injury

This type of coverage ensures that you do not lose your assets if you are sued for injuring someone in a car accident. Depending on the state, minimum requirements are anywhere between $10,000 and $20,000 per accident. The maximum coverage per accident is around half a million dollars.

When you choose this type of coverage, you should ask yourself two questions: “How much can I pay out of pocket in the event of a car crash?” and “How much coverage do I need to protect my belongings from being taken away from me?”

Usually, the coverage for bodily injury goes up if you have a lot to lose. For example, the higher the value of your home and other properties, the more you have to protect. If your home is worth $230,000, you need liability coverage to cover at least this amount of money.

Collision Coverage

Collision coverage covers the cost of damage done to your car in an accident whether it involves someone else or someone else’s property.

This type of coverage is not mandatory, but if you took a loan when purchasing your vehicle, the lender may request you to buy collision coverage and specify the deductible as well. The higher the deductible, the lower your monthly payment is. In this case, you will spend more out of pocket if an accident occurs.

Collision coverage is more valuable when your car is new and expensive. For example, if you own an older car that is only worth $2,000, it may not be worth purchasing collision coverage.

Property Damage

Property damage is typically mandatory, but the minimum amount of insurance is not likely to protect your assets in the case of a serious accident.

This type of insurance protects you in case you hit a home or cause property damage. In this case, the owner of the damaged property will pursue the money that is necessary to make the repairs, and if you cannot pay it quickly, your assets will be seized. To avoid this, you should talk to your insurance agent about what property damage policies are available to you.

Comprehensive Coverage

Collision coverage covers the damage of your car due to an accident. However, there are other ways your vehicle can be damaged. For example, natural disasters, fire, or theft can all lead to significant losses. While it is not mandatory, it is recommended, especially if you live in an area known to be at risk for natural disasters or has high crime rates.

Another factor to consider is the value of your car. The higher the value of your vehicle, the more useful comprehensive coverage is.

Medical Expenses

This type of insurance covers medical expenses and care for you and any other people who happen to be in your car during an accident. The higher your premium, the less you will pay out of pocket in the event of a car crash.

Before you purchase this type of insurance, you should think about what assets you have and whether they will be in danger if you cannot pay your medical bills.

Uninsured/Underinsured Motorist Coverage

According to the Insurance Journal, 1 in 7 drivers are uninsured or underinsured. Without uninsured motorist coverage, you will have to pay for damages done by other drivers who do not have car insurance or lack enough insurance to pay for your repairs.

Instead of going to court and losing your time and money trying to get your money from someone who may not have enough assets, you can choose a safer, preventative path. Uninsured or underinsured motorist coverage covers the damages made by these drivers. Depending on the state, this type of coverage can include your medical expenses and property expenses as well.

How Do I Choose?

At Olson Insurance Agency, we understand that selecting a car insurance policy is a highly personal decision. Depending on your budget, assets, and potential risks, we can help you determine which policy is best for you. If you have any questions, contact us today!

Scroll to Top