How Much Car Insurance Do I Need?

Almost every state in the country has a minimum amount of car insurance which residents must have in order to legally drive on the roads.

While there's always a minimum, there's never a maximum. This seems fitting in an unintentional way. After all, there's a seemingly never-ending supply of insurance products out there.

You always want to comply with your state laws. You probably want coverage for your damages, too – but what kind of deductible makes the most financial sense?

Do you want health coverage? Well, maybe. In some cases, an existing medical policy, such as one from an employer, might be enough. In other cases Personal Injury Protection is the better option.

What's the right amount of car insurance? How do you know when you're fully protected, without wasting money on policies you'll never need?

Here's your complete guide on how to determine how much car insurance you need:

Liability: Check Your Local Listing

Liability insurance is a policy you buy but which pays out to the other parties injured in an accident you're involved in. The general idea is that if you cause an accident, you can contribute towards medical bills for the other drivers and passengers plus pay to repair damage to the other vehicles.

Liability insurance is mandatory in pretty much every state for every driver. Here's the thing, though. There's no federal standard for liability minimums. They vary from state to state .

Liability insurance is divided into three categories. For instance, California minimums are:

·        $15,000 bodily injury liability per person

·        $30,000 bodily injury liability per accident 

·        $5,000 property damage liability per accident

How Much Liability Insurance Do You Need?

This depends on your assets and budget. If your car is mostly just for getting around, and you're on a budget, maybe the minimums are your best course for now.

If possible, insurance experts recommend getting at least the next step up from the minimum. This might be a bit harder on your budget, but the minimum in many states is often only going to satisfy legal requirements and not provide actual financial security for you.

If your assets are bit more expensive, you'll probably want to increase your liability insurance by quite a lot. Experts recommend homeowners go up to $100,000 / $300,000 / $300,000.

Collision and Comprehensive Insurance

This is insurance for your car. Collision insurance works just as it sounds by providing coverage for any collision between your car and another vehicle. This can also be a collision between your car and an inanimate object, like a streetlight or a tree.

Comprehensive insurance covers other types of damage to your car. Think of all the odd types of stuff which can happen to your car. A wind storm breaks a branch which falls on your car. Teenagers go a vandalism spree on your street with paintball guns. Many types of non-collision-related damage is covered by comprehensive coverage – but not all.

Comprehensive insurance doesn't cover damages caused by uninsured drivers. Despite the potentially harsh penalties and fines, many people still choose to drive without car insurance.

Getting into an accident with an uninsured, or even underinsured, driver can cause you big problems. Collision and Comprehensive policies won't help you. The law is on your side, but if the other driver doesn't have a lot of money there's really no point in taking the person to court.

With Uninsured Coverage, you're protected against damage caused by an uninsured driver. How do you know if you need this type of coverage? Busy metro areas with lots of street parking are usually the riskiest. A simple Google search about the uninsured rates in your city can also help you determine if this is the type of policy you'll want.

How Much Full Coverage Insurance Do You Need?

Most bundled coverage deductibles are $100, $250, $500 and $1,000. This is for physical damage. The higher your deductible, the lower your rate. At the same time, you have to pay the deductible before you can file a claim. If the higher deductible won't be a problem whenever you might need it – which could happen basically at any time -- that's your best course of action. Otherwise go with the highest amount you can comfortably have to keep on hand.

Collision and Comprehensive cover amounts are based on actual cash. Payout is based on the value of your vehicle at the time of the accident minus depreciation.

How Much Personal Injury Protection Do You Need?

Car accidents don't have to be dramatic to cause a lot of injury. Even a slow speed "fender bender" can lead to prolonged neck, back and spine problems.

Personal Injury Protection provides coverage for medical bills which results from injuries sustained in an auto accident. Also called PIP, this coverage also applies to any passengers in your car during the accident.

Aside from immediate medical and surgical needs, PIP can also provide for long-term care including lost wages and physical therapy.

In stages with mandatory No Fault car insurance coverage, PIP is required for all drivers. Drivers in No Fault states are covered under their own policies. This limits the potential lawsuits which are possible, but also usually ends up paying out for medical coverage far quicker because there are no court proceedings.

If you have quality health insurance, then you might consider skipping PIP coverage. Your existing health care plan will take care of your needs. But if you regularly drive around many other people, PIP is a way to provide coverage for your passengers – which also protects you financially.

Online insurance agents such as Chimp Quote make searching through top insurance providers quick and easy. You can create a customized list of policies which suit your current needs, stay within your budget and keep you safe on the road at all times.