By the end of 2021, almost 290 million cars will be on American roads. That's more than one car per person in the country.
A car is one of the most important items in America today. 83% of adults report driving frequently, including 64% who do so daily.
When you use an item so much, especially an expensive item, you want to protect it as much as possible. This is where car insurance comes in.
Of course, the first question that comes to mind is, "How much auto insurance do I need?" It depends on many factors, including the value of your car, where you live, other assets you want to protect, etc.
In this comprehensive article, we help shed some light on how to determine how much auto insurance to buy. Read on to learn even more .
Why car insurance?
For some car owners, auto insurance seems like an unnecessary expense. The fact that car insurance rates go up as the car ages doesn't help matters.
However, don't underestimate the value of car insurance, especially given the prevalence of car accidents. The statistics paint a grim picture. In 2018 alone, there were over 6.7 million car accidents in America.
It could happen to anyone. Car insurance can help cover damages and injuries resulting from a car accident in the unfortunate event that it happens to you. Medical bills, property damage and legal fees can be financially devastating to a car owner without car insurance.
Even if you are never involved in a car accident, there are still other threats that car insurance can protect you against. These include theft, vandalism, falling objects and extreme weather conditions.
Almost all states, including Missouri, require you to have a minimum amount of car insurance. Even if your state does not require you to have auto insurance, you are obligated to pay for any damage caused by your vehicle. The best way to prepare for such an event is to have car insurance.
To determine how much insurance you need, you must first look at the different packages of an auto insurance policy. Some of the most popular packages include:
- Property damage civil liability
- Civil liability for bodily injury
- Full coverage
- Collision coverage
- Bodily Injury Protection Coverage
Some of these packages are mandatory, depending on where you live. Beyond the mandatory requirements of your lender or state, you may choose to purchase additional coverage. Let's take a close look at some of these packages to help you determine how much insurance you need.
Civil liability for bodily injury
This coverage covers injuries that you or a member of your family listed on your insurance policy cause to another person in an accident. Each state requires you to purchase this coverage. However, the amount may vary from state to state.
As a general rule, you should purchase at least the minimum amount required by your state for bodily injury coverage. Most states require at least $25,000 per person and $50,000 per accident. If you live in Missouri, consult a reputable MO auto insurance agent to determine how much liability you need.
Liability for property damage
This plan covers you when you or a family member cause damage to someone else's vehicle or property in an accident.
Similar to bodily injury liability, all states require car owners to have this coverage. The minimum in most states is $20,000 or $25,000.
However, it's always best to purchase more coverage than your state requires. Your Missouri auto insurance agent can help you determine an appropriate amount for you, based on the assets you want to protect.
Personal Injury Protection (PIP)
This coverage helps pay for injuries to the driver and passengers of your vehicle in an accident. Sometimes the PIP will cover the cost of lost earnings resulting from injuries sustained in the accident.
This coverage may be mandatory or optional, depending on your state. Again, it's always a good idea to have at least more coverage than is required by your state, considering the potential costs in the event of serious injury sustained in an accident.
This type of coverage covers the repair or replacement of your vehicle in the event of an accident. It is optional coverage in all states. However, most lenders require you to have this coverage, but you can drop it as soon as you finish paying off your car loan.
Of course, it's a good idea to buy collision coverage, given the cost of a major repair.
So what collision coverage should you buy? It depends on the value of your car. The insurance broker who guides you in choosing your car insurance can give you an idea of the amount you will have to pay.
Typically, expect a deductible between $250 and $1,000. Your insurer is responsible for paying the remaining amount required for the repair or replacement after you have paid the deductible.
Full coverage
Comprehensive coverage will pay for damage to your car that results from something other than a collision. This includes a flood, a falling tree or a fire. If your car is stolen, full coverage will replace it.
Full coverage is not required, although lenders may require it. You can deposit it as soon as you finish paying off the car loan.
The amount you need depends on the value of your car, in case of theft. You also want to consider whether you can comfortably pay repair bills if needed.
Choose the right amount of coverage for your car
So how much auto insurance do I need? Different factors come into play. Once you've figured out what type of coverage you're getting, mandatory and optional, you can get a clearer picture of how much you need to pay.
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