What is the recommended auto insurance coverage

You Need at Least $20,000 in Property Damage Liability Auto Insurance Coverage and $50,000 in Bodily Injury Liability Car Insurance in Most States

If you don’t know the coverage requirements in your state offhand, you may ask, “How much car insurance do I need?” In this article, we at the Home Media reviews team will look at how to find the appropriate amount of coverage —  while reviewing factors that affect the price of a car insurance policy. We have also reviewed some of the best car insurance companies, because one shortcut to cheap car insurance is getting prices from multiple insurance providers.

Is Car Insurance Required?

To drive legally, you’ll need to purchase at least the minimum coverage limits. Where you live will determine the state minimum required insurance you’ll need to carry for your car to be considered street legal. 

Most often, this includes a certain amount of liability insurance. Liability coverage ensures that if you cause an accident, the other parties’ medical bills and repair bills will be taken care of. It does not cover any damage to your own car or your injuries after an accident you’re found at fault for.

Car Insurance Requirements

Each state sets its own minimum liability insurance requirements, which you’ll often see broken down into three numbers. For example, California requires minimum coverage limits of 15/30/5. That means drivers need to purchase at least $15,000 in bodily injury liability coverage per person, $30,000 in bodily injury liability coverage per accident and $5,000 in property damage per accident.

Liability coverage is broken down into two parts:

• Bodily injury liability: Covers medical expenses and lost wages for individuals other than the at-fault driver
• Property damage liability: Reimburses another party for damage to their vehicle or property when the policyholder is at fault for an accident

States may also mandate additional coverage besides bodily injury and property damage liability coverage. Here are some other common types of insurance you might need to carry depending on where you live:

Is State Minimum Insurance Enough?

Assessing how much car insurance you need really breaks down into two factors: where you live and what car you drive. As mentioned, a liability insurance policy is required in some form by almost every state. In addition to that, the value of the car you drive and whether you own it outright dictates what optional kinds of insurance you may want to carry.

How Much Liability Insurance Do I Need?

The risk of purchasing the minimum amount of car insurance is that a driver may not be totally covered after a car accident. If a California driver carrying the bare-minimum coverage causes $35,000 in property damage, they wouldn’t have enough liability insurance to cover the costs. The remaining $30,000 would have to come out of their pocket, and if they were not able to pay, they could be sued.

Car Insurance Liability Limits

As a general precaution, insurance experts recommend choosing the largest liability limit you can afford. That helps to protect your wallet and protect you from lawsuits in the event of an at-fault accident.

The average price of liability coverage in 2018 was $644.11, according to the National Association of Insurance Commissioners (NAIC). Higher coverage limits usually mean a higher premium, but other factors like your car, driving record and credit score also shape the price of an insurance policy.

Do I Need Full Coverage on My Car?

If you’re shopping for insurance, you’ve probably seen the term “full coverage” mentioned a few times. While there’s no universal definition, it usually refers to a policy that combines liability car insurance, collision insurance and comprehensive insurance.

Here’s an overview of what each of these policies covers: 

Neither collision nor comprehensive coverage is mandated by law in any state, but you may need it if you have an outstanding car loan. Lenders often require that drivers purchase additional coverage in order to protect their investment.

If a car is damaged and declared a total loss, depending on the claim, comprehensive or collision insurance will reimburse the policyholder up to the actual cash value of the vehicle, minus an agreed-on deductible. If the car is being financed, that payout will go to the lienholder.

Each of these coverages is required in certain states but can be purchased optionally elsewhere.

Do I Need Full Coverage on a Financed Car?

Taking out an auto insurance policy on a financed vehicle may mean purchasing more than just liability coverage. As mentioned, lenders generally require car owners to carry collision and comprehensive coverage because these types of insurance pay for damage to a vehicle that the lender legally owns.

Newer cars may be more expensive to insure if they have a high value or are expensive to repair, so a lender may ask for higher coverage limits. That usually means a larger insurance premium for the car owner.

Do I Need Gap Insurance If I Have Full Coverage?

In addition to comprehensive and collision coverage, a lienholder may ask that a driver purchase gap insurance as well. “Gap” stands for guaranteed asset protection, and the coverage assists the policyholder when a financed car is totaled.

After a total-loss accident, if your insurer pays out the actual cash value of your car and it does not cover the amount you still owe on the vehicle, gap insurance pays the difference. For example, if you owe $15,000 and your insurer values your vehicle at $10,000 after a total-loss accident, gap insurance will pay most or all of the remaining $5,000 balance.

Additional Car Insurance Coverage

Outside of liability and full coverage insurance, there are a number of add-on policies that offer coverage for other costs related to car ownership. While they do add to your insurance rates, some offer a good value and peace of mind on the road. These include:

Car Insurance Add-ons

Though not required, customers can purchase the following coverage types:

Not all insurance providers have these options, so be sure to ask about the coverage you want when getting a quote or contacting an insurer for information.

How Much Auto Insurance Do I Need?: Conclusion

The car insurance coverage that you need to purchase in order to operate your vehicle legally will depend on the state that you live in and the car that you drive. Most states require liability insurance at a minimum. However, this will only protect others in an accident and not yourself, which is why it’s important to look at all of your coverage options as you make a decision. 

Auto Insurance Coverage Recommendations

Most car insurance companies will offer you a range of coverage options when you shop for car insurance. Based on our research of the best car insurance companies, we recommend reaching out to USAA and Progressive for car insurance quotes.

USAA: Low Rates for Military

USAA scores well in J.D. Power customer satisfaction surveys and offers low rates for most drivers, according to our research. In fact, the company tends to be about 48% cheaper than the national average for good drivers based on our rate estimates. However, USAA is only available to military members, veterans and their families, so it’s not a viable option for everyone.

Read more: USAA insurance reviews

Progressive: Low Rates for High-risk Drivers

Progressive offers special discounts that can be useful for drivers with DUIs or speeding violations on their record, including the usage-based insurance program Snapshot®. This program puts more weight on current driving habits than your driving history. Additionally, Progressive’s rates are about 7% cheaper than the national average, according to our estimates.

Read more: Progressive insurance reviews

How Much Auto Insurance Should I Have?: FAQ

Frequently Asked Questions

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

• Cost (30% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
• Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
• Reputation (15% of total score): Our research team considered market share, ratings from industry experts and years in business when giving this score.
• Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
• Customer Experience (15% of total score): This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

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