How Much Coverage Do I Need?

Nearly every state requires a minimum amount of liability insurance coverage.

You can usually guarantee you will need more than the minimum amount because accidents typically cost far more than that. If you are found legally responsible for more than your insurance covers, you could end up paying for the difference out of your pocket, which could easily wipe out your finances.

Make sure you speak with your insurance agent or company representative about retaining higher liability limits or consider an umbrella or excess liability policy, which will pay for costs when your basic coverage is exhausted. These policies usually cost only about $200 to $300 per year and you can have millions in coverage.

Make sure you always inquire with your current insurance company first about further coverage as it may be easier to go with a provider with whom you have an established history.

Beyond liability coverage, you can consider collision and comprehensive coverage. You won't have a choice about how much you buy since your coverage will be based on the actual cash value of your car and the cost of repairing it.

Finally, you will have to decide on a deductible, which is how much you pay for a claim before you can collect the rest. Deductibles are usually $500 to $1000 and the higher your deductible, the lower your premium.