How much car insurance do I need?

When you are getting a vehicle, it’s common to consider what car insurance coverages are right for you. After all, required coverage varies from state to state and sometimes there are state minimums which may not be sufficient. Unfortunately, there's no black and white answer. It depends a lot on what coverages you need and the amount of deductible you feel comfortable with. The State Farm Personal Price Plan® helps you create an affordable price (just for you).^{footnote 1}

Here's a helpful breakdown to use while looking to purchase auto insurance.

What is liability insurance and how much do I need?

Liability insurance covers expenses when you’re at fault in a crash. This coverage extends to other vehicle(s) that sustain damage, referred to as Property Damage (PD) liability, and to people who are injured, referred to as Bodily Injury (BI) liability, as a result of your negligence. Most states require you to carry a minimum amount of liability coverage on your vehicle.

Liability coverage not only pays for damages and injuries you are at fault for, it also serves to help protect your assets. No one can predict exactly how much you'd have to pay if you caused an accident. The key question to ask is: Can you afford to cover any damages exceeding your coverage limits? The higher your liability coverage limits, the more damages your policy might cover.

Your assets and their value may be put at risk if you lack the auto coverage needed to cover a loss for which you’re at fault. If the liability limits you carry do not cover the damages, you may be personally responsible for paying the additional out of your pocket. Another consideration is looking into a personal liability umbrella policy for additional coverage.

Auto liability insurance is generally shown as a series of 3 numbers. For example, 100/300/100, where every number represents a dollar amount (in thousands) of coverage in various categories.

Do I need comprehensive and/or collision insurance?

It depends. Collision coverage helps cover repairs to your car if you’re in an accident. Comprehensive coverage helps cover your car if it’s stolen or damaged by something other than a collision or rolling over. You might not have a choice not to carry this coverage if your car is leased or financed; most lenders will require you to carry enough coverage to cover the cost of repairs to your car.

If you own your vehicle without a loan or lease, you could consider whether the savings from dropping collision and/or comprehensive coverage is enough to offset the risk of having to pay the entire cost of repairing or replacing your car on your own.

For example, if your car is totaled from an accident in which the other driver is at fault and has no insurance, hit in a parking lot while you were in the store shopping or stolen while you were hiking at a park, do you have the means to replace it without any help from the insurance company?

If your car is older and not an antique, you may want to consider if collision and comprehensive coverage are worth it. You can look at the cost of collision and comprehensive coverage and see if the insurance policy cost more or the same as the worth of your vehicle. If so, you may consider not carrying these coverages.

For example, if your car is worth $1,000 and your coverage costs $500 a year plus a $500 deductible, you must decide if the cost of the coverage plus deductible is worth it or not.

How much should my collision and comprehensive deductibles be?

This is a balancing act. Higher deductibles typically lower your premium but will increase your out-of-pocket costs if a loss occurs. Ask yourself how much you're willing and able to pay directly, often on short notice, to potentially save on your premium. If you want to lower the amount you have to pay when a crash occurs, you might want to opt for a lower deductible.

If saving money on your insurance is your motivating factor behind removing your collision and raising your deductible, consider these other car insurance money savings tips.

• Bundling - check with your insurance company about choosing to combine the purchase of your home insurance or renters insurance with your auto insurance.
• Insurance ratings - when purchasing your vehicle, consider how the insurance company will rate them. Some cars cost more to insure than others.
• Consider sharing your driving information - programs like Drive Safe & Save® from State Farm put you in the driver's seat of your discount.

What other coverages should I consider?

Here are a few other types of coverage that you might want to consider. Your insurance company can provide you with more specific information on requirements and limits available where you live, since these coverages might be mandatory in some states.

• Uninsured/Underinsured motorist coverage - pays for damages if you or another covered person are injured in an auto accident or struck as a pedestrian caused by a driver who does not have liability insurance or is underinsured as defined by the policy. In some states, it may also pay for property damage. The coverage varies by state and depends upon policy provisions and is subject to a policy limit chosen by the insured.
• Med pay/Personal injury protection - covers medical expenses for you and passengers resulting from an auto accident or being struck as a pedestrian, regardless of fault. It may also pay for rehabilitation, lost earnings, replacement of services, and funeral expenses. The coverages vary by state and specific policy.
• Emergency road service - pays for covered roadside assistance services when your vehicle is disabled. These services could include towing, locksmith, jumpstart and tire changes.

There are also some coverages that are optional and might be useful like rental reimbursement or ridesharing. At any time, if you have questions about vehicle coverages or what affects car insurance premiums, you can contact an agent . You can get an auto insurance quote now, or give us a few details and a State Farm® agent will reach out to you.