How Much Car Insurance Do I Need?

If you have recently bought your first car or obtained your driving license, after which you plan to buy your car, you must know that car insurance is a must thing. There are hundreds of insurance companies offering a variety of insurance policies. But the question which comes to your mind is, 

“How much car insurance do I need?”

There are several factors that you must consider in order to answer this question. Following are some of these factors.

Minimum insurance level

Every state has its minimum insurance level that every car owner must have. For example, in Texas, the minimum insurance level that you must have is $30,000 for every injured person, $60,000 for the accident and $25,000 for damage to property in the accident.

This is the minimum state requirement which you must comply with in order to drive legally. However, this is usually insufficient and you must get insurance greater than this level.

In case you are restricted by your budget or have no asset other than your car you can have a minimum level of insurance.  

If you are financially stable you can go to higher levels of insurance.

For example, if you own a good conditioned car and belong to the middle-income class, an insurance level of 100/300/100 would work for you. Experts agree that this is the optimum level of insurance for middle-class people with a certain level of savings at most of the times.

Uninsured/under insured motorist coverage

Some states make it mandatory to have uninsured/under insured motorist coverage. This kind of insurance helps you protect against damages if you are hit by someone who is not insured or is under insured. Generally, the rule is you can have this coverage if you can afford it. But if you have bought health insurance and collision coverage, then you might not need uninsured/under insured motorist coverage.

Comprehensive/collision coverage

So when this question arises in your mind, “How much insurance do I need?” there are a number of factors to be considered pertaining to your car. If you have a car which is less than ten years old, if you can ill afford its repair if it is damaged in an accident or if you live in an area which is affected by natural disasters or animals running over the cars, hitting them, then you would require comprehensive and collision coverage.

Comprehensive coverage pays for the damage that occurs in the car due to factors like weather, theft, vandalism, fire or any animal hitting the car. On the other hand, collision coverage pays for damages that occur to your car when it collides with some other car during an accident.

When you purchase collision and comprehensive coverage, there is an amount of deductible that you must set. 

This is the amount that you must pay from your pocket when you file a claim. If you set a high amount if deductible then you would be required to pay the low premium.