How to calculate how much coverage you need
To calculate how much coverage you need, you’ll need to do a little research.
Check your state’s minimum car insurance requirements
In most states, you’ll need to purchase two types of liability coverage: bodily injury liability and property damage liability. Bodily injury liability covers costs related to injuries or death caused to someone else by whoever is driving your car, while property damage liability covers damage to someone else’s property, such as a car, garage door, or utility pole.
Some states may also require personal injury protection (PIP) and uninsured motorist coverage. PIP reimburses payment of medical expenses for injuries to you or your passengers. Uninsured motorist coverage covers your expenses if you’re in an accident caused by an uninsured or underinsured motorist or a hit-and-run driver.
Texas, for example, requires a minimum of $30,000 in liability coverage for each injured person, up to $60,000 per accident, and $25,000 in liability coverage for property damage per accident. You’ll see this shown as 30/60/25 coverage. All car insurance policies in Texas include PIP coverage by default even though it’s an at-fault state.
Determine the value of your vehicle
It’s important to understand how much your car is worth because that’s how much it’ll cost to replace if it gets damaged or stolen. You can find your car’s value by using a site like Kelley Blue Book. Once you know this number, you’ll have a better understanding of what coverages make sense for you.
For example, if you have a new vehicle, you may want to purchase coverage with higher liability limits. You might do this if you think the minimum liability coverage wouldn’t adequately pay for repairing or replacing your car or wouldn’t be enough to reimburse medical expenses.
Consider comprehensive and collision coverage
If you’ve taken out a loan or lease for your car, your lender may require you to purchase comprehensive and collision coverage. Together, comprehensive and collision coverage make up what is known as full coverage, which can be useful even if your lender doesn’t require it.
Comprehensive coverage reimburses you if your car gets damage from something other than a collision, such as a fire, flood, or hailstorm. Collision coverage pays for damage to your car from an accident with another vehicle or a collision with an object.
Choose a deductible you’re comfortable paying
Your deductible is the amount you pay out of pocket in the event of a claim before your insurance coverage kicks in. For example, if you have a $500 deductible and submit a claim for $1,000 in damages, you’ll have to pay $500. The higher your deductible is, the cheaper your average monthly rate will typically be.
Explore optional coverage
Certain types of car insurance aren’t required but can be useful. Some examples include coverage for towing your car and coverage for a rental car if your vehicle was stolen or is in the body shop.