At a minimum, you should purchase your state's minimum auto insurance requirements. However, state minimums are woefully inadequate and don't offer any coverage for your own car repair bills. If you want better coverage, you'll need to buy more than the minimum requirements. As a former claims manager and fraud investigator, he has seen a lot and enjoys helping others overcome the complexities and opacity of insurance.
Replace liability coverage that an at-fault driver should have had and pay your costs up to the limits of your policy. But regardless of what your state or lender requires, you may want to purchase additional insurance to protect yourself. If you already have an auto loan, your goal is to cancel it as soon as possible so you can cancel GAP coverage and lower your premium. Having coverage equal to the value of the assets you own and all the money you have, minus your debt, protects you financially in the event of a serious car accident.
Medical payment coverage covers your medical expenses after an accident, regardless of who was at fault, it usually overlaps with PIP and standard health insurance. Personal Injury Protection (PIP) is similar to MedPay, but it has broader coverage, higher coverage limits, and a higher premium. If you choose a high deductible, your insurance company considers you a lower risk and will reward you with a lower premium. Buying coverage greater than the minimum required and what types of optional coverage to consider will depend on the assets you need to protect and how much you can afford.
A good rule of thumb is to supplement the car insurance required in your state with enough additional coverage to fit your net worth. But before we look at exactly how much car insurance you need, let's understand some insurance terms. With a basic knowledge of the main types of car insurance, you can create a good policy that fits your specific insurance needs. Term coverage insurance generally covers the difference between the value of your car and the balance of your car loan if your vehicle is full.
The exact amount you'll pay for car insurance will depend on several individual factors, such as your age, where you live, the make and model of your car, and your driving history.
