"How much car insurance do I need?" is an exceedingly difficult question to answer, as there are so many factors that need to be taken into consideration. These factors include your driving history, how much coverage you can afford, what type of coverage best suits you, your maximum premium (the amount you pay during each pay period) and your maximum deductible (the amount you pay out of pocket in the event of an accident), just to name a few.
How much can you afford?
When figuring out how much car insurance you need, first you need to determine how much you are capable of paying. Liability insurance is the most basic kind and is mandatory in almost all states. It covers only damage that you cause to others, including their damage to their car, damage to their property and medical expenses, and sometimes it also covers your legal team in the event that a suit is filed against you. These plans are the least expensive, but they don't cover everything. A higher degree of coverage that at least covers some of the damage to your own car is essential, especially if you can't afford to fix it up yourself.
Have you comparison shopped?
Once you determine how much you are capable of paying, look at different plans and see which one best suits your needs. There is no set formula or method for accomplishing this. The decision is made even more difficult by the sheer volume of car insurance companies out there who would love to sell you on their plans. Make sure you don't buy into false claims and promises. Do your research, and know that different companies are better for different people. Just because your friend got a great deal from one company doesn't mean a plan from that company is the best choice for you. Shop around and get car insurance quotes from various companies before you make your decision.
How well do you understand the plan's coverage?
It is also key to work with your insurance agent to make sure that you thoroughly understand your plan. Does it include all the provisions you may require, like a replacement car while yours is in the shop so you can get to your job?
When it comes to figuring out how much car insurance you need, there is no equation that you can simply plug your information into. You need to sit down with a professional, figure out how much you can afford and what coverage you need and try to get the best deal possible.
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