An online calculator can help you understand the answer to, “how much auto insurance do I need”. Yet, these don’t factor little things like your driving habits, passengers, and location. The actual coverage may be different from what’s quoted through some automated system!
How do you determine what coverage you need? Keep reading, you’ll get this answer and find a lot more you never knew were worth asking.
How Much Auto Insurance Do I Need? Start with the State Requirements
Nearly every state has its own set of car insurance requirements. The exception to state insurance requirements includes New Hampshire.
Most states require coverage of the following:
- Property — Pays for vehicle damage or theft
- Liability — Pays for bodily injury or property damage
- Medical — Pays for medical bills, lost wages, funerals, and rehab
Your state may also include:
- Collision — Covers damages to the policyholder’s vehicle
- Comprehensive — Covers damaged by non-collision damages
- Uninsured/Underinsured — Covers damages if other drivers do not meet required coverage
Check with local insurance providers about policy coverage. Or, inquire the requirements when registering a vehicle. Insurance is a typical requirement during the registration. Consider getting coverage before completing this task.
Consider Yourself, the Vehicle, and Who It’s Protecting on (And Off) the Road
One should consider the following when choosing insurance coverage:
New drivers tend to carry higher deductibles and premiums because they’re unproven behind-the-wheel. Younger drivers cause more accidents, warranting the higher cost of auto insurance.
Other driver-related factors could include:
- Health insurance — Compensates for personal injury protection
- Responsibility — One’s respect for road rules and safety
A driver may need high risk auto insurance if they have a history of driving incidents, too.
The vehicle should play a factor with factors like:
Financed cars carry higher premiums whereas older, owner-financed vehicles have inexpensive insurance options. The property and collision coverage may be reduced or omitted if the vehicle has a low value.
Finally, consider the location with factors like crime and accident statistics. Premiums may go up if drivers live in high-risk neighborhoods. Or, are located in places with many uninsured or underinsured drivers.
Should I Claim Insurance?
Consider the following if you’re involved in an incident:
- Vehicle’s value
- Who was at fault
Yes, filing a claim is in one’s best interest as it keeps the insurance company up-to-date. Drivers are required to (at least) call the police. But, minor cosmetic damages and some single-car accidents may not warrant the effort.
You may choose to pay out-of-pocket if you and the other party feel it’s the best option. A light fender-bender, for example, may be nothing to worry about. Or, causing damage when on your personal property, as another example.
A Note about SR22 and High-Risk Insurance
You may have heard about SR22 insurance when shopping for auto insurance coverage. Insurance companies issue SR22 certificates to the state ensuring drivers carry auto coverage. The certificate declares the driver is financially responsible for their actions when behind-the-wheel.
SR22 is a common need for drivers with suspended or revoked licenses. The coverage is an extra included with normal auto insurance policies. Failure to carry SR22 after an incident like a DUI can result in major penalties.
Minimum Coverage, Driving, and You
Simply put, the answer to “how much auto insurance do I need?” is answered in the state’s requirements. Yet, you’re welcome to expand coverage based on individual needs. Check policy providers to compare quotes for the optimal coverage for your budget.
Insurance coverage is one of several monthly finances. Take control of your budget with our money guides.