How Much Auto Insurance Do I Need?

As a car owner, you have the responsibility of showing that you have an auto insurance policy. You must have a policy so that you can cover the costs of any damages that can happen if you are in an accident (or the person behind the wheel of your vehicle) and are at fault.

So whether or not you need to carry auto insurance isn’t an important question. The big question is, “How much auto insurance do I need?” It is required by law in every state, but the requirements may vary depending on where you live.

If you’re in the market for car insurance and you want to brush up on what the most common car insurance coverage types are, read on below as we explain everything you need to know.

What to Look for When Shopping for Car Insurance

When you’re ready to start shopping for car insurance, you’ll want to understand what is required in the state you live in and how much coverage you would like to have above and beyond that requirement.

We don’t recommend carrying the minimum coverage available. These policies offer bare bones coverage that probably won’t even pay for your own damages in the event that you are in an accident and need your vehicle repaired.

Choose wisely when you decide how much coverage you need and which type of policy you want to buy. If you aren’t sure which one is best for you, read on as we break down the most common types below.

Collision & Comprehensive Insurance

There is only one choice for your policy if you want any damages to your car to be covered in the event of an accident. Collision and comprehensive insurance is a type of policy that bundles the two types of coverage together to offer the most solid policy that will cover most types of damage to your vehicle.

While this policy will most likely be the most expensive option, you can opt for a higher deductible to lower your monthly insurance premium. Keep in mind that many lenders will require a comprehensive policy with collision if you are leasing your vehicle.

Liability Insurance

Liability insurance is a type of policy that will pay damages to another party if you are liable in an accident. Remember that these policies are often a minimum requirement in every state, but the most basic liability policies do not offer suitable coverage for most accident expenses.

This means that if you are determined to be at fault, but your policy doesn’t cover the injured party’s medical or repair expenses, you will be responsible for covering any costs above and beyond your policy limits.

Uninsured and Underinsured Motorist

With an uninsured motorist (UM) or underinsured motorist (UIM) insurance policy, your insurance company will cover any medical expenses you incur if someone causes an accident but, doesn’t have enough (or any) coverage.In some states, you will be required to carry an uninsured motorist policy (if you live in Texas this is an optional policy).

No matter how you look at it, an UM policy is a good thing to have written into your coverage. This will cover medical expenses incurred by you or your passengers, funeral expenses, pain and suffering, vehicle damage, and any lost wages due to missed work following an accident.

Personal Injury Coverage

A personal injury protection policy will provide coverage for the medical bills of you and your passengers regardless of who is found to be at fault. Additionally, this policy will cover lost wages, expenses incurred because of your injuries, and funeral expenses. This is required in some states, but it’s a good optional policy to consider.

Need more help? Check out our general car insurance guide.

What Are Some Optional Car Insurance Coverages?

Once you have settled on your core insurance policy, you may want to consider one or more of these optional add-ons. They can cover any gray area in your policy to ensure that you have the most comprehensive coverage available.

Let’s look at the following options:

Gap Insurance

This is a great add-on policy to consider. If you are in an accident or your car is damaged irreparably and seen as totaled by your insurance carrier, gap insurance will cover any differences between the cash value of your vehicle and how much you owe.

That means that if your car is totaled and your cash value is $25,000 but you still owe $27,000, your gap coverage will kick in and cover the additional $2,000.

Roadside Assistance

Roadside assistance is a well-known safety net that many drivers won’t go without. If you do not carry some type of roadside assistance plan, this is an excellent add-on option that will kick in if your car breaks down, you get a flat tire, run out of gas, lock your keys in your car or need to tow your vehicle to a service station.

Rental Reimbursement

If your car needs to be in the shop but you don’t have a secondary vehicle available, rental reimbursement will cover the costs of renting a vehicle or using alternative transportation.

What Can Happen if I Drive Without Insurance?

We don’t recommend driving in any capacity without insurance. Firstly, driving while uninsured is against the law, so if you cause an accident, you can count on major fines and possibly getting arrested.

If you cause an accident that results in injury to you or someone else, you will be fully responsible for any medical expenses incurred. If the injured party sues you, that will also be your responsibility. Don’t drive without car insurance.

Contact LOOP Today for Your Free Insurance Quote!

If you’ve got a new vehicle , check out LOOP to make sure that you get the best coverage for the best price. No matter your budget, we can work with you to find a policy that suits your needs. Use our credit calculator to see how much you can save with LOOP (we don’t use your credit score or education to quote your premium).