How much auto insurance coverage do you need?

Even though there is minimum auto insurance required by state, you still might be asking how much auto insurance coverage do you need. Between property damage and medical payments, drivers can take a huge financial hit if they don’t have car insurance or their coverage isn’t enough. So, to avoid having to pay out-of-pocket costs after an accident, you have to determine your ideal amount of coverage.

Read on to learn about the required state coverages and optional coverages to consider. We’ll help you figure out how much car insurance coverage is enough for you.

State Minimum Car Insurance Requirements

Each state’s minimum car insurance requirements show how much liability insurance drivers should carry.

Liability car insurance covers two different types of damages: bodily injury and property damage. Bodily injury covers medical expenses and lost wages for any driver and passenger involved in the accident except the at-fault driver. Property damage covers the cost of damage to the other driver’s vehicle or property.

Read more: Does auto insurance cover hiting a pole?

Minimum Liability Auto Insurance Coverage Requirements by State

Read more: Does liability auto insurance cover hitting a deer?

When reviewing state car insurance minimums, you’ll see three different numbers, each representing the required amount of coverage. For example, the minimum coverage limits for Washington auto insurance are 25/50/10, so drivers must carry $25,000 in bodily injury coverage, $50,000 in bodily injury coverage per accident, and $10,000 in property damage coverage per accident.

To get an idea of the cost for minimum coverage in each state, take a look at the map below.

In some states, liability coverage is not the only insurance required. These are other common insurance coverages that states mandate:

• Uninsured/underinsured motorist coverage (UM/UIM). This insurance covers the cost of your loss if you are involved in an accident with an uninsured or underinsured driver, as well as property damage and medical expenses in the event of a hit-and-run.
• Medical payments (MedPay) or personal injury protection (PIP). This insurance covers the cost of medical expenses, lost wages, and funeral costs for the policyholder and passengers involved in an accident.

Similar to liability insurance, these coverages are meant to help drivers avoid the out-of-pocket costs associated with car accidents.

Deciding if State Minimum Insurance is Enough

To answer this question, you have to take two important things into account: your location and the type of vehicle you own.

As mentioned, the minimum insurance drivers are required to carry varies by state, so you first want to confirm your state minimum insurance. You can then decide if you want to just cover your vehicle or also cover the cost of any expenses that could result from an accident.

For example, say you need Arizona auto insurance, where the state minimum coverage amount for property damage is $10,000. If you were to get into an accident and cause $22,000 worth of property damage to the other driver’s vehicle, your liability insurance would only cover $10,000, leaving you to pay the difference of $12,000. To avoid having to pay out of pocket or being sued by the other driver, you could opt for the highest liability coverage offered by your insurance company.

Because you’ll still have your car to consider when purchasing insurance, this is where additional coverage comes in handy. Any damage done to your car will not be covered by liability, so you’ll have to pay out of pocket. However, if you have collision insurance, damage to your vehicle can be covered.

Drivers should keep in mind that depending on the value of their vehicle and the status of ownership, they will be required to carry comprehensive insurance and collision insurance. For example, someone who has financed or leased a vehicle will be required to carry collision and comprehensive insurance. (For more information, read our “Financed vs. Leased: What’s the difference?“).  According to AAA, the average annual cost of full coverage car insurance is between $1,200 and $1,350, depending on the type and size of the vehicle.

Read more: Buy Cheap Auto Insurance for Leased Vehicles

How to Choose an Insurance Deductible

Over 70% of drivers purchased comprehensive and collision coverage, according to the National Association of Insurance Commissioners (NAIC). But unlike liability coverage, collision and comprehensive coverage carry a car insurance deductible, meaning if your vehicle is damaged in an accident you caused, you need to pay a fee before your insurance will cover the cost of repairs for your vehicle.

Luckily, you’ll get to choose the deductible, which typically ranges between $250 and $1,000. The lower the deductible, the higher your premium, but you also want to choose a deductible you could afford if an accident occurred.

Read more: Does auto insurance cover riot damage?

Optional Car Insurance Coverage

So, you now know liability insurance, collision insurance, and comprehensive insurance work great in combination to offer financial protection in the event of a car accident, but there are additional optional coverages available to drivers who want to ensure they are covered in a variety of situations.

Additional optional car insurance coverages include the following:

• GAP insurance. This insurance covers the difference between your remaining loan balance and the cash value of your car. If you own a car that is worth $12,000, but your loan balance is $15,000, GAP insurance will cover the remaining $3,000.
• Rental car reimbursement. Rental reimbursement covers the cost of a rental car while your vehicle is being repaired.
• Roadside assistance. This add-on covers the cost of various services, including a locksmith, tow truck, fuel delivery, and jump start.

Not all drivers may find these additional coverages necessary beyond the required car insurance, but depending on your situation, purchasing GAP insurance, rental reimbursement, and/or roadside assistance can save you a lot.

The Final Word on Necessary Auto Insurance Coverages

When figuring out the answer to how much auto insurance coverage do you need, remember that you need to carry your state-required coverages to legally drive. If you have a lease on your vehicle, then you will need a full coverage insurance policy, which we also recommend for the majority of drivers for complete protection on the road.

If you are ready to start looking for car insurance coverage, use our free quote comparison tool. It will help you find the best auto insurance rates on your chosen coverages.