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How Much Automobile Insurance Do I Need?

Here’s the truth: there isn’t one automobile insurance coverage limit that will work for everyone. This doesn’t mean you can’t use a handful of fundamentals, though, to help you select limits that won’t just meet your budget, but that also adequately protect you in the event of an accident. 

In this article, the IHS Insurance Group staff will outline the main factors you’ll want to keep in mind when determining your auto insurance coverage needs. Let’s take it part-by-part. 

How Much Auto Liability Insurance Do I Need to Protect Others? 

If you’re involved in an at-fault accident, your auto insurance policy provides two coverages to pay for the damage you cause: 

  • Bodily Injury (BI) – Covers another person’s injuries, including drivers of other vehicles and their passengers, as well as pedestrians. May also cover related medical expenses, lost wages, legal expenses, and funeral costs. 
  • Property Damage (PD) – Covers damage to another person’s car, in addition to commonly damaged surrounding property like fences, buildings, and so forth. 

These limits are typically displayed as 100/300/100, where the first number references the BI limit per person, the second relates to the BI limit per accident, and the third your available PD limit per accident. 

Every state has minimum liability requirements, although they’re probably not sufficient to cover your assets in anything other than a minor fender-bender. 

In most instances, we recommend purchasing as much liability insurance as you can afford, although 100/300/50 is typically the minimum starting point. There’s often not a substantial premium increase when maxing out your policy’s liability limits, but the protection provided by the higher limits could prove invaluable. 

Related: Why Is Auto Liability Coverage Important? 

How Much Liability Insurance Do You Need for You & Your Passengers? 

Whereas your auto policy’s core liability protects others, you can also purchase coverage to safeguard yourself and your passengers. Uninsured/Underinsured Motorist (UM/UIM) coverage kicks in if you’re involved in an accident with someone who’s determined at-fault, but who doesn’t have enough insurance (or none at all) to cover your property damage (UMPD) or medical expenses (UMBI). 

UM limits are displayed like standard BI and PD limits, and typically don’t cause a steep premium increase when adding to your policy. As a result, we recommended purchasing the maximum limit you can afford to sufficiently cover you in a worst-case scenario. 

How Much Comprehensive & Collision Coverage Should You Buy? 

When it comes to damage to your vehicle, regardless of fault, your auto insurance policy provides two types of protection: 

  • Collision – Pays to repair your car if you strike a fixed object, such as another vehicle, a tree, fence, building, etc. 
  • ComprehensiveKnown as “other than collision,” this coverage protects against causes of loss not related to physically striking another vehicle or fixed object, such as theft, vandalism, glass, fire, accidents with animals, and acts of nature (hail, windstorm, etc.), to name just a few examples. 

Technically, comprehensive and collision are optional coverages under an automobile insurance policy. However, if you carry a loan or finance your vehicle, the lender will require that you add both, which also protects their interests. Even if you don’t carry a loan, we generally recommend adding comprehensive and collision if your vehicle is newer than five years. 

Compared to liability limits, comprehensive and collision feature a flat per-accident deductible, typically ranging between $0 and $2,500. Another big difference is that changing your policy’s collision deductible could have a considerable impact on what you pay. For example, if you decrease from $1,000 to $250, you could expect a sharp rate increase, and vice-versa. 

Thankfully, comprehensive is often much more affordable than collision coverage, and won’t swing drastically if you change deductibles one way or another. 

Which Additional Auto Coverage Endorsements You Should Consider? 

In addition to these core coverages, there is a whole slew of optional endorsements you can add to your auto policy, depending on your needs and budget: 

  • Guaranteed Asset Protection (GAP) – Cover the gap between what you owe on a car and what it’s worth if totaled in an accident. Again, some lenders will require this. 
  • Mechanical Breakdown – Similar to an extended warranty through your dealer, this covers mechanical repairs unrelated to an accident. 
  • Replacement Cost Coverage – Pays for 100 percent of your car’s current cost new if totaled in an accident. 
  • Rental Reimbursement – Pays for a rental vehicle while yours is being repaired due to a covered claim. 
  • Roadside Assistance – Provides emergency services like towing, tire changing, and battery jump-starting. 
  • Umbrella – Excess coverage if you exceed the underlying liability coverage on your auto policy. 
  • Glass Coverage – if you live in a state where cracked windshields are common, this could save you a lot of time, hassle, and money, for relatively little money per month. 

Related: Should You Add These 4 Popular Endorsements to Your Auto Policy? 

How Can You Learn More About How Much Automobile Insurance You Need? 

Whether or not you should increase your limits, or add any of the endorsements mentioned above, depends on a wide variety of factors. For example: 

  • Are you married?  
  • Do you use your vehicle in the course of business?  
  • Do you travel frequently?  
  • Do you have a teen driver in the household?  
  • Is your vehicle financed or leased?  
  • What’s your driving activity look like? 
  • Do you have sizeable assets? 

Related: How to Choose the Right Auto Coverage & Still Save Money  

As you can see, there are many things to consider. The good news is that the process doesn’t need to be complicated! The friendly, highly-trained staff at IHS Insurance Group is standing by to help. 

 Need a FREE Quote or have questions regarding Auto Insurance Coverage? We have three convenient ways to reach us: 

  1. If you prefer to talk to a licensed agent directly, please call (866) 480 5063
  2. If you prefer to fill out a quick form and have an agent get back with you at your convenience, use the GET A FREE QUOTE. 
  3. Lastly, for those that want an immediate quote, please click HERE. 

We look forward to speaking with you today!

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