Last Updated on January 13, 2023 by Faiza Murtaza
Every driver in America needs car insurance, but how much? Unfortunately, insurance companies aren’t always transparent on this point. Furthermore, it can be tough to know how much insurance is wise given that damages for personal injuries or property damage can be as little as a few hundred dollars up to many thousands of dollars.
This page will break down how much car insurance you should have and explore the different types of insurance you can purchase.
Every state in the US has car insurance minimums. That is, legal drivers must carry car insurance coverage that at least covers those drivers up to a minimum amount of monetary damage, such as $20,000. These minimums are typically expressed in a three number bracket:
● Coverage for personal injuries for one person/coverage for injuries for multiple people/coverage for property damage
For example, Illinois has a minimum auto insurance coverage requirement:
● $25,000 for injury or death of one person/$50,000 for injury or death of more than one person in the same accident/$20,000 for property damage
This requirement can also be expressed like this:
Therefore, every driver needs to meet at least their state’s minimum auto insurance requirements. Not having insurance coverage up to these amounts could result in you being fined if you are ever pulled over. You may also face additional legal penalties.
If you become involved in an accident and don’t have insurance, you may be required to pay out-of-pocket or whatever money you have to cover the damages caused to the other party. In some cases, underinsured or uninsured motorist coverage from the other driver could save you from this financial problem, but it’s not a good idea to count on this.
Types of Car Insurance Coverage
Although the minimums are good rules of thumb to follow when shopping for car insurance coverage, you may also wish to go above those minimums just in case. Let’s take a look at the different types of car insurance coverage you can purchase.
Bodily Injury Coverage
Bodily injury coverage, also called bodily injury liability, pays for injuries that you or your family members (those listed on your policy) cause to another person in an auto accident. For example, if you are found at fault for a car accident and you cause $10,000 worth of damage to that person, this coverage will make the payment instead of it coming out of your wallet.
Bodily insurance coverage is the first required type of coverage required for most state minimums. It’s the first number in the three number bracket representation broken down above.
Read More: What are the Risks of not having Business Auto Insurance?
Property Damage Coverage
Property damage coverage pays for any property damage that you or a family member on your policy cause to another driver’s car or other property, like a fence or tree. Virtually all states require property damage coverage just like they require bodily injury liability coverage. It’s the third number in the bracket sequence detailed above.
Medical Payment Coverage or Personal Injury Protection
PIP or medical payment coverage is the middle number of the required state minimum bracket sequence detailed above. It covers the cost of injuries both to your car and any passengers in your car. Depending on your state and the details of your policy, it may also cover lost wages that result from injuries sustained in your car accident.
Collision coverage is an optional form of car insurance that helps to replace or repair your vehicle if you are involved in an auto accident or you hit an object other than a car. States don’t usually require drivers to have collision coverage, but it can be a good idea if your car is particularly valuable. This will help you with repair bills after an accident without having to pay too much out-of-pocket.
Comprehensive coverage is not required by state insurance laws, but it is very worthwhile for many drivers. As its name suggests, comprehensive coverage offers insurance coverage to your car from any damage other than a collision, including fire damage, falling tree damage, flood damage, and even car theft.
Therefore, if your car is damaged in any circumstance other than a collision, comprehensive coverage will help you pay to repair or replace that vehicle. If you don’t have this coverage, your regular auto insurance policy will likely not help you pay for anything.
Note that comprehensive coverage does not include the required three liability coverage types described earlier. You have to purchase comprehensive coverage on top of your standard bodily injury, property damage, and personal injury protection coverage.
Uninsured or Underinsured Motorist Coverage
Last but not least is uninsured or underinsured motorist coverage. Not every driver has liability coverage even though most state laws require it. Furthermore, some drivers have some amount of car insurance but not enough to cover the full cost of serious accident damages.
Underinsured or uninsured motorist coverage takes care of these damages. It can cover both you, the policyholder, and any other family members if you or they are injured or your car is damaged by an uninsured or underinsured driver. This coverage also protects you from paying out-of-pocket if your vehicle is hit by a hit-and-run driver and you are unable to identify them or contact their insurance provider.
So, How Much Car Insurance Should You Have?
In the end, you should have as much car insurance as you are comfortable paying for. The more car insurance coverage you have, the higher your premium will be each month, and the best car insurance agents St George has will tell you that from the start.” at the location in the screenshot below. However, more car insurance coverage could lower your deductible in the event of an accident or make your insurance company more likely to pay you after an incident.That said, be sure to contact knowledgeable car accident attorneys if you’re ever involved in an incident with another driver. Don’t call your insurance company right away; instead, call your car accident lawyers so they can negotiate on your behalf. The right car accident attorney can maximize the value of your insurance payout and make sure you aren’t denied coverage for any reason.