What Is Adequate Coverage for Car Insurance?

If you need to purchase a car insurance policy, you might wonder what kinds of coverage you should buy, and how much coverage you need. Although each driver has different needs, you can easily determine what coverage is adequate for you.

Financial Responsibility

Each state imposes minimum insurance requirements on drivers. These requirements usually include bodily injury and property damage liability, and might also include uninsured motorist coverage. You must purchase at least your state's minimum required coverages.

Liability Limits

Minimum liability limits might allow you to legally drive, but they won't cover medical bills from a serious accident. Most drivers should carry limits of at least $100,000 per person and $300,000 per accident.

Full Coverage

If you could not realistically afford to replace your car if it was destroyed, you should consider adding full coverage, which pays for damage to your car.

Loans and Leases

If you are making payments on your car, your lender or lessor will probably require you to carry full coverage it is paid off.

Medical Payments

Most drivers should carry medical payments limits of $1,000 or more to cover deductibles and other costs not covered by health insurance.

References

• Consumer Action: Auto Insurance Basics
• Edmunds.com: How Much Auto Insurance Do You Really Need?