Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Sep 16, 2020

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Key takeaways...

  • There are many scenarios and reasons why you would need to ensure you have the right amount of car insurance
  • State minimum requirements though usually don’t cover everything you and your car could face
  • Liability, comprehensive, and collision coverage are the top three essential car insurance types
  • Although there are more supplemental options you can add on to make sure you are fully covered

Navigating the car insurance jungle can seem very confusing at times, and many consumers often ask the question, “How much car insurance do I need?” — which is a very fair question.

If you have never been in a car accident, made an insurance claim, or learned about the basic types of car insurance coverage, how would you really know how much car insurance is enough?

Almost all of the major car insurance companies advertise “Get a Car Insurance Quote” or “Save Money on Car Insurance.” However, the question of how much you need is often buried away from the main pages of company website or never really discussed at all.

Car insurance policies are created based on risk and with the sole purpose of creating profit for the car insurance companies; however, sometimes you can either get stuck with too little coverage or overpaying for too much coverage.

States do have minimum car insurance requirements, but these limits are so low that you really need to ignore them and always get more coverage.

Before choosing any car insurance company, learn about the different types of car insurance, compare the finer points such as deductibles and policy limits, and always compare at least a few quotes.

Enter your ZIP code above if you’d like to start comparison shopping today for better and more affordable auto insurance!

Table of Contents

Why do you need car insurance?

Car insurance is often viewed as an unnecessary expense since many drivers will never make a claim. However, car insurance is vital to the protection of your family and property for many reasons.

First, it’s illegal to drive without car insurance, so you are risking losing the privilege to drive without it. That possible risk should be enough for some people to get car insurance, but sadly it is not.

Secondly, car insurance provides coverage for accidents, which by definition are occurrences that happen simply by accident and are rarely foreseeable.

With the right amount of car insurance, your family and property are protected by having coverage for medical expenses, loss of wages, and numerous other items which can bankrupt most American families in a matter of minutes.

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What types of auto insurance are available?

https://www.youtube.com/watch?v=-Zr63hTicTU&t=40s

Several car insurance types exist. The most important ones every driver should have are:

  • Liability
  • Comprehensive
  • Collision

Liability insurance is the only car insurance policy required by almost all states. This coverage provides protection in accidents you are involved with which cause either (a) damage to other vehicles or (b) damage to your vehicle which is not the fault of another car (tree falling down for example).

Note that liability insurance is not a blanket protection from litigation.

Although liability insurance does drastically reduce the need for a lawsuit, as minimum liability insurance limits are generally based on the average cost of a vehicle. No further claim would be needed as liability coverage can usually cover the cost of any damage to a vehicle.

However, if the damage exceeds the policy limits (which is often the case with luxury cars), you can have personal liability to the damage above and beyond your coverage – which is one of the reasons we highly suggest always securing more than just state minimum requirements for liability insurance.

Collision insurance is for “road-related” damages. For example, if you strike another car while operating the vehicle on the road or vice versa. The typical definition of a car accident applies the most to collision coverage.

Comprehensive insurance is a critical type of car insurance to protect your vehicle, but it is almost never required by law.

The logic behind comprehensive not being required is that comprehensive coverage is more of a self-insurance rather than coverage to protect other drivers.

Comprehensive car insurance provides coverage for items such as:

  • Car theft
  • Storm damage
  • Key scratching
  • Things which cause damage to the car and contents inside

Other types of car insurance exist such as bodily injury liability and personal injury protection (PIP) exist, but depending on who the car insurance company is you may or not need this.

And don’t forget to learn about car insurance discounts!

If you’d like to save on auto insurance and get better coverage, enter your ZIP code below and compare at least three to four policies today!

References:

  1. http://guides.wsj.com/personal-finance/insurance/how-much-car-insurance-do-you-need/
  2. https://www.nolo.com/legal-encyclopedia/the-role-car-insurance-car-accident-case.html
  3. https://www.thebalance.com/filing-auto-insurance-claim-2645925
  4. https://www.forbes.com/sites/moneywisewomen/2013/01/08/what-really-goes-into-determining-your-insurance-rates/#3a92fd283f85
  5. https://www.iii.org/article/is-it-legal-to-drive-without-insurance
  6. https://wallethub.com/edu/types-of-car-insurance/9636/
  7. https://www.investopedia.com/terms/a/automobile-liability-insurance.asp
  8. https://wallethub.com/edu/collision-insurance/7292/
  9. https://money.howstuffworks.com/personal-finance/auto-insurance/comprehensive-auto-insurance-cover.htm
  10. https://wallethub.com/edu/bodily-injury-liability/8607/
  11. https://www.investopedia.com/terms/p/personal-injury-protection-pip.asp