How Much Auto Insurance Do I Really Need?

The minimum legal requirements for auto insurance are incredibly low. They are also usually inadequate to protect you in the event of a serious accident. Similarly, you may not be required to carry certain types of coverage, such as bodily injury liability insurance. In such situations, you should consider obtaining additional coverage, such as uninsured motorist coverage. Whether you need these types of insurance or not will depend on your individual situation.

Adding collision and comprehensive coverage can double the amount you pay each month. If you drive often, you can reduce your monthly premium by choosing a higher deductible. The only downfall to a higher deductible is that you may need more money out of pocket if you need to make a claim. This is where an emergency fund comes in handy. However, if you do not own a car that is worth much money, you may want to reduce your deductible to just liability insurance.

In most states, liability insurance is required. It pays for other drivers’ bills in the event of an accident. Bodily injury liability covers the expenses of a person who is injured in a car accident. Depending on the severity of the accident, these costs may be much higher. Regardless of the level of coverage you buy, consider what your net worth is. If you have a high income, you might want to consider buying more coverage to cover additional expenses in the event of an accident.

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