How Much Car Insurance Do I Need

In this day and age saving money is all the rage, and for good reason – times are tough. It is surprising to find out, then, that a large percentage of drivers are actually over-insured in regards to their car insurance coverage because they are not sure how much car insurance they need. It is important to evaluate your actual auto insurance needs and make cuts where appropriate, so family funds can be diverted to other areas of your budget. We will help you answer one of the most important questions you can have when buying car insurance: “How Much Car Insurance Do I Need?”

What Does Being Over-Insured Mean?

Every state that requires auto insurance has minimum liability limits for property and bodily injury damages, so this is the basis upon which your car insurance policy should rest. Everything else that is added on will obviously cost more.

Collision insurance and comprehensive coverage will sometimes be necessary, but many people add on other, expensive riders and have multiple, overlapping policies with high limits that will likely never be used. All this extra coverage isn’t necessary and means the policyholder is over-insured. Learn more about collision vs. comprehensive car insurance.

How Do I Know What Is Unnecessary Coverage?

Evaluate your current car insurance policy carefully with an eye for each type of coverage and its limits. Always make sure your liability exceeds the state minimum, but be realistic on how much more you want and need since your car insurance rates will be higher too.

If you have special kinds of insurance such as rental car insurance, roadside assistance, gap insurance, and high PIP insurance coverage, your car coverage might be redundant in relation to other insurance and memberships (AAA or credit unions offer rental car insurance or roadside assistance, too) you already have.

Also, the kind of car you drive will determine how necessary physical damage coverage is. Getting cheap car insurance gets easier by eliminating unnecessary items that increase your rates.

Rental Car Insurance

Rental car riders are very popular for people who have collision and comprehensive coverage; this is because this insurance will provide a rental car while your vehicle is in the shop for repairs. However, analyze that policy carefully to determine whether it’s worth the extra money.

If the policy limits the rental car for a very short period of time and has an unrealistic spending limit it may not be worth it: you might be able to get a rental car for at a cheaper rate on your own without having to make a claim on your insurance and raise your rates.

Roadside Assistance

Roadside assistance is another expensive rider many people add on because it makes them feel safe. It’s comforting to know your insurance will send someone out to give you a tow, a can of gas, or a ride if something happens. Despite this, there are inexpensive ways to go than with insurance.

Getting a membership with AAA or another auto club provides the same benefits plus more savings on other services, and just like with rental insurance, you can use those benefits without filing a claim with your auto insurance. These memberships are generally much less expensive than the rider.

PIP Car Insurance and Medical Payments Coverage

Personal Injury Protection (PIP) coverage is required in many states, especially those which are no-fault, such as Florida. Mandatory coverage is usually around $10,000, but many consumers get higher limits out of fear and forget about their health insurance.

Also, they might add on other riders such as for medical payments coverage in an effort to be thorough. Despite the best of intentions, what usually ends up happening is they are extremely over-insured, and it costs them money they could be saving with cheaper car insurance rates.

Keep your PIP car insurance as high as necessary and remember that your health insurance (if applicable) will pay for your medical costs anyway.

Collision Insurance

Collision insurance is required when a vehicle is being financed, but in many cases it just isn’t necessary. An older vehicle is often not worth the deductible you have to pay for repairs after an accident. Most people raise their deductibles as high as they can afford to bring the overall cost of car insurance lower.

If your car is only worth $1000 to $5,000 according to its Blue Book value, then it’s not worth having collision insurance in the first place. If the accident isn’t your fault, the car will be replaced by the at-fault driver, and if you’re at-fault, you can put that deductible money to better use buying a new car.

Cheap Car Insurance

Since auto insurance is a legal necessity, it is important to learn as much as you can about your minimum coverage requirements, and what is and is not necessary. MyCarInsuranceRates.com hopes we helped you answer the question, “how much car insurance do I need.”

Once you have a good idea, you can save money on a new policy by comparing auto insurance companies online. Luckily, this is something that we can help with.