How Much Auto Insurance Is Too Much?


You may be wondering right now how much auto insurance you should have. We’ve been told gazillion times that the more coverage we packed in, the lesser the chances of future financial setbacks.  The only problem is that your budget for this year is relatively low. If you were one of those people who are trying to make ends meet, naturally, you’d want to know how much is too much.

Many factors are considered before we can decide how much auto insurance is too much.  Keep in mind that different individuals have different requirements, and so what works for me might not work for you.

The most common factors involved when deciding are the following: the desired amount of deductible, place of residence, the type of vehicle or customizations applied (such as upgrading of stereo system, painting), etc. Additionally, you might want to consider the six elements below to aid in your decision-making.

Bodily Injury Liability – This is a major component and almost mandatory in all states in the U.S. This coverage takes care of any sustained injuries of the other party (driver and the passengers) from medical bills to lawsuits. If one of your passengers needs medical attention, this will take care of it as well. Bodily injury liability is able to cover per person with a maximum amount set per accident. For example, you could choose to have $100,000 liability coverage on each person and up to $300,000 (maximum amount) per accident.

Property Damage Liability – This works pretty much the same as the above, only instead of covering body injuries, this will take are of any damages to property sustained during the accident. Aside from paying for the car’s repair costs, this can also be used to pay for damaged items inside the vehicle during the accident such as laptop or other gadgets. Most states would require drivers to carry this type of coverage that can be lowered down up to $5,000, which is, in reality, is far less than the value of most of electronic gadgets let alone the car.

Personal Injury Protection – As the name implies, this will take care of your medical or funeral bills resulting from the accident. Since most people already have health and life insurances, this can be removed safely from the policy.

Uninsured Motorist Protection – This type of insurance is only applicable when the at-fault driver (other than you) doesn’t have enough insurance to cover the damages incurred. Considering that there is an increasing trend of uninsured drivers, you might want to look at adding this type of coverage to your existing policy. Adding so will cost you around $50 a year for $100,000 coverage.

Collision and Comprehensive Coverage – These two types of coverage will definitely cost you a substantial amount of money. Collision indemnifies in case your car needs repair or total replacement after an accident while comprehensive protects your car against vandalism, natural disasters (such as hailstorm, windstorm, and theft), etc. Comprehensive coverage is particularly useful if you own a new car or highly priced cars such as vintage cars. Anybody looking for a total protection should include these two in their policy.

Add-ons, Extras and More – Other coverage such as windshield protection or extra rental coverage (useful if you need to rent a car after an accident) may be added as the need arises. Talk to your insurance agent if you need some special coverage requirements.