How Much Car Insurance Do I Need?
This is one of the most common questions asked of insurance agents.
Everyone would like to save money on car insurance. Why not? After all, we hope we’ll never use it. We expect to trade in our cars two years after purchase in the same pristine condition as when we bought them. And we don’t even want to think about injuries. But accidents happen. Car insurance is a necessity, not only because it’s required by law. How much car insurance is enough? Legally, the requirement depends on your state’s laws, most of which specify at least $25,000/$50,000 in liability insurance. If you’re penniless and your job prospects are few, that may be enough. If you’re earning a living, own a home or other assets, or expect to, it isn’t. Your liability insurance limits must be high enough to protect what you own or expect to own. After their cars reach a certain age, many people discontinue comprehensive and collision insurance. You need comp and collision on your car to protect anything you cannot afford to replace. If you can buy another car without financial stress after yours is totaled in an accident, and it’s paid for, take the comprehensive and collision coverage off your car. But if an accident could leave you afoot, keep the coverage.
The bottom line is you need as much car insurance as you have assets you want to protect.