How much Car Insurance should I Carry?

Last Revised on July 10, 2013

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Other than the initial price of purchasing the car, there is no other higher expense than the cost of insurance. Yes, even the amount of money you spent on gas and maintenance repair over the lifetime period of the car is far less purchasing an insurance coverage for it. For that reason, many drivers choose to drive on the road without carrying insurance on their car at all, which is not only illegal but can lead to suspension of driving privileges as well as hefty fines. So, how much car insurance is enough?

How to decide what type of auto insurance coverage to get?

Depending on how carefully or seriously you are looking car insurance policy, it will be a difference maker about how much you will be spending and how often you will change the coverage. Let’s look at list of things to consider when deciding how much car insurance is enough for you:

  1. What you looking for:  No matter how many free quotes you ask from auto insurance companies, you won’t get the best one until you don’t know what type, coverage, price, length of period, etc you are looking for from the company. So it is best to first jot down the answers to these questions before filling out forms for free quotes online or talking on the phone with an agent.
  2.  Affordability: like we said before, some car owners end up paying more on car insurance over lifetime period of the car than what they paid for the car itself. So know how much you can afford to pay, for example from $15 to $150 per month, because the monthly insurance premium varies between different type of coverage, companies, and number of payments you decide to make. Some people do opt for minimum coverage required by the state law; it will cost you the least, but in case of accident you have pay on your own.
  3. Coverage: some may why we put so much emphasis on coverage because aren’t all the insurance coverage same? The answer is no; there are different types of liability coverage to choose, based on which you insurance rate is decided. So higher the  liability coverage you carry, higher price you pay. There are Bodily Injury Liability (LBL), Property Damage Liability, Personal Injury Protection (PIP), and coverage such as Comprehensive, Collision, and Uninsured/ Underinsured Motorist Coverage.
  4. Deductibles: we just talked about the liability coverage, but not how important it is. But we can’t emphasize enough how important the liability coverage is because if you are not covered by that during an auto accident, you will have to pay for it. Best thing to do is customize the liability deductibles based on how much you can afford and driving safety record in the area you drive the car.
  5. Who will drive? If you have kids, parents or siblings who will also use your car, consider adding them to your insurance policy. Because when you get an insurance with only your name on the policy card, the other drivers are not covered and therefore insurance won’t cover anything that occur when the driver was anybody other than you.
  6. Insurance companies: just like no products or services are sold at the same price by every store, similarly different companies sell insurance at different rates. There are direct sellers such as GEICO, online companies like eSurance, hybrids like Progressive, large national brands like AllState and State Farm who has agents with offices in almost every city. Usually, online and direct insurance companies tend to be cheaper since they don’t have a middleman earning commission or fees of some sort before reaching the customer.
  7. Policy period: Length of auto insurance policy can vary from one month to 6 months to a year. Reason some people sign up for only a month long coverage is because usually they intend to cancel their coverage soon since they plan to get a better deal in the near future. Usually carrying six months coverage is considered ideal because you save money by paying in full, companies offer better deal for those who sign up for extended period and there is less hassle of trying to renew and pay the premium every month.

Some tips to keep in mind while searching for the best suitable care insurance coverage to carry for any type of driver: you can get discounts for signing up multiple cars as well as home you own with the same company. Even though it may be tempting to just get the bare minimal insurance policy on your car to save money, but unless you drive rarely and live in a quiet area with little to no need for auto insurance, it is usually recommended to get the insurance that covers the car for its equal value.

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