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How much car insurance do I need?

Learn about coverage limits, collision and comprehensive, deductibles, and other important terms to help decide on how much is right for you and how you can save.

It's a common question: How much car insurance do I need? 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. So let's try to break it down:

How much liability insurance do you need?

Liability covers expenses when you're at fault in a crash. The coverages extend to the vehicle and persons impacted by the crash but not the individuals in your car. Most states require you to carry a minimum amount of liability coverage on your vehicle.

No one can predict exactly how much you'd have to pay if you cause a crash. But 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.

To get an idea of how much liability coverage you might need, add up the value of your home, cars, savings, and investments. Then subtract your debts (what you owe). For example, if the total "net worth" was $220,000, you could consider $250,000 liability for injuries per accident. If you feel you need additional coverage, you can increase it typically in $50,000 increments up to $500,000. If you feel you need coverage beyond that, consider an umbrella policy.

Do you need comprehensive and/or collision insurance on an old car?

Collision coverage covers repairs to your car if you're in an accident. Comprehensive coverage covers your car if it's stolen or damaged outside of an accident. You might not have not a choice 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 the vehicle, 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. For example, if your car is totaled from an accident in which the other driver as at fault and has no insurance, hit in a parking lot while you were in the store shopping, or stolen from 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, it might be time to drop the collision and comprehensive coverage and put that money into savings. You can take 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, it might be time to drop the coverage. For example, if your car is worth $1,000 and your coverage costs $500 a year plus a $500 deductible, you're not really getting anything for your money.

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.

Multiline: Check with your insurance company about combining 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.

Vintage car insurance for collectors

Vintage car insurance, also known as classic car insurance, is designed to provide coverage for antique, rare, or collectible vehicles. These policies are tailored to meet the unique needs of collectors, and typically provide specialized coverage options and higher limits than standard auto insurance policies.

If you're a collector of vintage cars, here are some things to keep in mind when shopping for vintage car insurance:

Agreed Value Coverage: With agreed value coverage, you and your insurance company agree on the value of the car before the policy is written. This ensures that in the event of a total loss, you will receive the full agreed-upon value of the car, rather than just its depreciated value.

Limited Mileage: Vintage car insurance typically includes limits on the number of miles you can drive the car each year. This helps to protect the car from wear and tear, and can result in lower premiums.

Specialized Repairs: Vintage car insurance policies may require that any repairs or maintenance on the car be done by a specialist who has experience working on antique or collectible vehicles.

Appraisal: Most vintage car insurance policies require an appraisal to determine the value of the car. This can help to ensure that you have adequate coverage in the event of a loss.

Storage: Vintage car insurance policies may have requirements for how the car is stored when not in use, such as in a secure garage or storage facility.

When shopping for vintage car insurance, it's important to shop around and compare policies from multiple insurance providers to find the coverage and rates that best meet your needs as a collector.
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