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How much car insurance do you really need?

Not only is purchasing auto insurance coverage a wise financial move, but most drivers are required to carry a minimum level of protection.

Cars, trucks, SUVs, and other vehicles drive in traffic on the 405 freeway through the Sepulveda Pass in Santa Monica, California, on August 25, 2022
Cars, trucks, SUVs, and other vehicles drive in traffic on the 405 freeway through the Sepulveda Pass in Santa Monica, California, on August 25, 2022 - Copyright Sony Interactive Entertainment Inc/AFP -
Cars, trucks, SUVs, and other vehicles drive in traffic on the 405 freeway through the Sepulveda Pass in Santa Monica, California, on August 25, 2022 - Copyright Sony Interactive Entertainment Inc/AFP -

Opinions expressed by Digital Journal contributors are their own.

The kind and amount of auto insurance that a driver is required to carry is set forth by law in almost every state. But you shouldn’t base your decision on how much insurance you need solely on your state’s minimum coverage requirements. The expense of replacing or repairing your car after an accident, theft, vandalism, or a natural disaster can be a serious financial setback. To get the best deal on the market, determine the minimum auto insurance requirements, assess your financial and personal needs, and use the best car insurance comparison sites. These websites can assist you in finding the coverage you require or investigating whether your policy will cost you too much.

This article analyses the minimum care insurance you will need so you can have an adequate insurance policy to cover accident-related costs and protect your family and assets in case of a mishap.

Reasons to get car insurance:

Not only is purchasing auto insurance coverage a wise financial move, but most drivers are required to carry a minimum level of protection. Here are three justifications for getting automobile insurance:

  • Requirement by law: For property damage and bodily injury, the majority of states mandate liability car insurance. Other types of coverage, such as personal injury protection (PIP) or uninsured/underinsured motorist (UM/UIM) coverage, may also be mandated by some states for drivers. If the proper coverage is not purchased, you may incur fees and fines, have your registration or driver’s license suspended or send to prison.
  • Financial security: If you’re in a car accident, you might be responsible for paying for related medical costs, property damage repairs, and legal costs. The majority of those expenses are payable by your insurance company rather than you if you have enough coverage.
  • Lender prerequisites: The lender will probably demand more coverage than your state’s minimums if you financed or leased your car. This is so that the lender, who technically owns the vehicle, can ensure it is protected financially in the event of an accident, physical damage, or other economic loss.

What car insurance coverage can you get?

A car insurance plan will incorporate several different kinds of protection. Liability coverage, collision coverage, and comprehensive coverage are the three fundamental types. Other necessary coverages include uninsured/underinsured motorist and medical payments coverage. You must now decide which coverage types are suitable for your unique needs.

  • Liability insurance: Liability insurance, which is necessary for almost every state, pays the other parties involved in a car accident if you are at fault for their property damage and bodily harm. This can apply to any injured pedestrians, the driver, and passengers of the other involved vehicle or vehicles, as well as the owner of the premises where the collision happened.
  • Collision insurance: Although not required by law, a lienholder on a leased or financed vehicle will typically require it. This type of insurance covers the harm an accident does to your car.
  • Comprehensive insurance: Although not mandated by legislation, a lienholder on a leased or financed vehicle will typically require it. This insurance protects your car from damage brought on by incidents other than collisions, like vandalism, theft, flood, hail, and damage due to fire.

Minimum car insurance you need

To determine how little auto insurance you actually need, follow these instructions:

  • Find the minimum requirements for your state. This might be sufficient if you don’t have a high net worth and own your car outright.
  • Check the conditions of any loans or leases you may have.
  • Calculate the value of your possessions. Your assets include the car, your savings, your house, and your business.

The importance of your assets? A court may issue an order to make up the difference even if you have to use all of your savings or sell your possessions in case you are involved in an accident with more damages than your insurance will cover. Additional insurance is relatively inexpensive when compared to the financial implications of an expensive collision or disaster.

Final thoughts

A catastrophe is only a matter of time if you drive without auto insurance. Your state’s laws will determine your specific punitive measures, but court costs and fines are almost a given. In most states, your vehicle’s registration will also get immediately suspended, meaning that if you are caught driving, your car will be towed away and confiscated. Your driver’s license may also get suspended in some states. Therefore, if you already don’t have car insurance make sure you expedite the process or at least don’t defer it.

George Nellist
Written By

George Nellist is a public relations, marketing and strategic brand expert who has executed social media and strategic marketing campaigns for a variety of Fortune 500 companies and small businesses. For more information, visit Ascend Agency.

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