How do I know how much car insurance to get?
Most people get skeptical when an insurance agent suggests higher coverage than the state minimum requirement for car insurance. Choosing car insurance can be confusing when you don’t know the different types of coverage you need.
Most car insurance coverage has limits of $25,000 and $50,000. While this may seem like a lot of money, these amounts barely cover medical costs in serious injuries, much less lawsuits and court costs. State required car insurance minimums will not be enough to cover property or bodily injuries in a car accident. So when deciding how much car insurance coverage to buy, it’s important to consider a few different factors. We break it down for you here.
How much auto insurance is required by my state?
According to Illinois Department of Insurance, the state of Illinois requires drivers to have:
- A minimum of $25,000 per person for bodily injury and $50,000 for all persons injured in one accident. These claims for bodily injury can include medical expenses, lost wages and pain and suffering.
- A minimum limit of $20,000 for all property damage in one accident, which includes damages to other vehicles, buildings, walls, fences and equipment.
- A minimum of $25,000 per person and $50,000 per accident in uninsured or underinsured motorist coverage. (Covers you in the event of an accident with an uninsured or an underinsured driver.)
Do I need any coverages in addition to what is required by my state?
Yes, it is advisable to get additional auto insurance coverage especially if you live in a big city, have a long commute, or own an expensive, or new car.
- Collision coverage: covers any damages to your car if you hit another car or object.
- Comprehensive coverage: covers your car for non collision related accidents like theft, natural disasters or extreme weather conditions.
- Personal injury protection: covers medical expenses that are not covered by the other driver’s liability insurance if you are in an accident caused by the other driver.
How do I decide how much car insurance coverage to buy?
As a rule of thumb, it’s always a good decision to buy higher limits and more coverage than the state minimum requirement.
Consider these factors:
- How many assets do you have? The more valuable assets you have, the more protection you need. Do you have an expensive car? Is your car new? Do you have enough savings in case you need to pay for damages?
- What is your budget? Only buy what you can reasonably afford.
- How much risk you can handle? If you have decent savings you may choose to pay a lower monthly and a higher deductibles and or choosing lower limits altogether. However, if your savings are limited, consider purchasing an insurance coverage plan that offers higher limits, yet is still in your price range.
- What kind of car do you have? If you have a new or valuable car, you’ll probably want comprehensive coverage. However, if your vehicle is not worth much, the cost of comprehensive coverage may not be worth it.
Car insurance is buying protection
The amount of coverage you should buy depends on the amount of insurance that is required by the state you live in, the amount of valuable assets you have, risk, and your overall budget and savings.
A good insurance agent will look out for your best interest and they will be the ones who will guide you to choose the best policy that realistically fits your lifestyle and budget.
