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How Much Car Insurance Do I Need?

Photography of a man smiling as he drives his car.

The first place to find out how much car insurance you need is to look at your state’s requirements, likely on the DMV website. When you shop for an insurance quote, the agent on the phone will likely be able to tell you how much car insurance you’re required to have. 

We know you’re wondering how much you can save, but the better question is, “how much insurance do I need?” You don’t have to choose between price or coverage; it’s possible to get all the coverage you need at a great price.

When you stop focusing on money and start focusing on coverage, getting a reasonable rate becomes more straightforward. But it isn’t easy to know how much car insurance you need when you’ve never bought car insurance before or have minimal driving experience. There are many types of auto insurance that keep you protected.

So, before we talk about what is required, we need to lay the foundation with some basic terms. 

Car Insurance Premium

A car insurance premium is the upfront cost of car insurance. It is the price you pay to a car insurance company to give you coverage. 

Most car insurance companies let you pay your premium in monthly installments, but sometimes you’ll get a discount for paying in advance. The premium typically covers six-months at a time. 

The car insurance coverage you select determines the premium you pay, but that’s not the only factor. Where you live, what you drive, your driving history, and credit history all play a role in how insurance companies set your premium. 

Knowing how much insurance you need will help you save money with a lower premium. Along with the deductible, the premium is one of the two costs you will need to consider when deciding on your car insurance policy. 

Car Insurance Deductible

The car insurance deductible is the cost you will pay for a repair in the event of an accident. The amount of auto insurance you need could be higher or lower, depending on your ability to pay a deductible.

Your auto insurance deductible is also known as your out-of-pocket cost. Like health insurance, it is the cost you pay before your insurance covers you. For example, if you have a $500 deductible, and you need $1500 in repairs, then you pay $500, and the insurance company pays the rest. 

Likewise, if you have $750 in repairs but a $1000 deductible, you will be responsible for the repair’s entire cost.

The typical deductibles are $500 and $1000, but they go as low as $100 and as high as $2000. Keep in mind, a higher deductible means a lower premium, but the more you pay out of pocket for repairs. A lower deductible means you pay less out of pocket costs but a higher premium.

Bodily Injury Liability

Bodily injury liability is one type of coverage you will need. Most states require some kind of protection. 

This type of coverage applies to injuries that you cause to someone else. Your bodily injury liability also covers you in the case of bodily harm if you are driving someone else’s car with their permission.

Even though states require a minimum, it is a good idea to get more than your state requires. If you are in a serious accident and cause serious bodily harm, they could sue you. Without the right protection, your assets could be in danger.

Collision Car Insurance

Collision covers damage from an accident, whether it is with another car or an object. Collision has a separate deductible, and if you are making payments on your vehicle, the financing company will likely require it.

Collision may not be required after your car is paid off, but you will have to pay for damages without it. Therefore, it is worth paying the higher premium to off-set repair costs in the case of an accident.

Comprehensive Car Insurance

Collision and Comprehensive insurance are usually spoken about together. While these are similar, they serve two different purposes. 

Comprehensive covers things that happen to your car when you are not driving it. So, if there is a bad hailstorm or someone keys your car, comprehensive will cover it. And like collision insurance, it may be required if you do not own your car outright. 

Get the Insurance You Need at Freeway Insurance

Most states require bodily injury liability and property damage, and they set their own requirements for coverage. For example, California requires bodily injury and property damage at 15/30/5, which means you need coverage of at least $30,000 for all persons injured in an accident, $15,000 for one individual, and $5,000 coverage for property damage. 

Likewise, if you are financing your car through a lender, they may require comprehensive, collision, or both. You will need to check with them about the required amounts. 

If you are not sure how much coverage you need, we will be happy to help. Freeway Insurance will get you a great rate, whether you are a first-time driver or if you have been without insurance for a long time. Visit us online, at an office near you, or call us at (800) 777-5620 for a quote.

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