Car Insurance

How Much Car Insurance Is Enough?

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When purchasing car insurance, you may be overwhelmed with all the options and wonder how much car insurance is enough. To solve this dilemma, consider what you are protecting and how much it will cost you to replace it without insurance. Most states require liability insurance and have a required minimum amount, and banks require collision and comprehensive coverage to protect them in the event of a loss. However, your personal situation determines exactly how much coverage you should have.

Liability insurance covers bodily injury liability for one or all people injured, and for property damage. You need to determine if your state’s minimums are sufficient for you. If your state’s minimum is $15,000 for one person injured in an accident, would that really be enough to cover one person’s medical costs? If not, and you are at fault, you can be sued for the rest and your assets will be at risk. If you own a home or a business, you need to be adequately covered.

Personal injury protection is required in some states, and covers your own medical costs and lost wages. What would you do if you were injured in a car accident and could not work? If you are injured by an uninsured driver with no assets, you can sue but you may never collect. How much car insurance is enough depends on how much money you would need if you were seriously injured and could not work, or required extensive medical treatment and rehabilitation.

Maintaining collision insurance is generally worthwhile unless the resale value of your car is truly negligible. Comprehensive (non-collision damage or theft) is also wise. Even if you live in a low-crime area, shopping malls and parking lots are prime targets for car thieves, especially if your car is an in-demand model for chop shop parts. Consider all these factors when determining how much car insurance is enough.
 

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