There are several different types of car insurance policy. Getting the right policy can be confusing, particularly if you’re a newer driver who isn’t experienced at buying auto coverage.

The minimum car insurance coverage you’ll need to meet your needs will depend on several key factors. These include the value of your vehicle, the state you live in, and how much coverage you can afford.

You may find yourself asking the question: how much car insurance do I need?

In this article, we’ll take a deep dive into auto insurance policies so that you understand the different types and levels of cover and can make an informed decision.

Why Do I Need Car Insurance?

Car insurance is there to protect you and your vehicle in the event of theft, a collision, or a natural disaster. You’ll pay your insurance premium so that you can have the comfort of knowing you won’t need to pay large amounts of cash out in the event of an accident.

You are required by law to at least have enough insurance to cover damage or injury to a third-party in the event of a collision.

Liability Insurance

Liability insurance compensates the third party affected by a car accident if you’re at fault. It covers both bodily injury and property damage.

This can include both the driver and the passenger of any other vehicles involved. It can also include pedestrians who were injured.

It is important to understand that liability insurance doesn’t cover you, your passengers, or your vehicle in a collision where you were at fault.

This type of policy is usually outlined as a ratio. For example, a 100/200/50 insurance policy would cover up to $100,000 for an injury to one person, $200,000 where there are injuries to more than one person, and $50,000 for damage to property.

Most states require all drivers to at least have liability insurance, however, the minimum level of cover may vary.

Collision Insurance

Collision insurance will pay for damage to your vehicle where you are at fault.

This type of insurance is not required by law. If you’re leasing or have a car on finance, it may be a requirement of the lender that you take out this type of policy.

Comprehensive Insurance

Comprehensive insurance covers you for other types of damage to your vehicles such as theft, vandalism, flood, fire, or hail damage.

This again is not a legal requirement. You may again need to have this type of insurance if you’re leasing or own a car through finance.

Compare providers to ensure you get the best deal on your comprehensive insurance.

How Much Car Insurance Do I Need?

If you’ve asked yourself the question “how much car insurance do I need?” then hopefully this article has helped. You’ll need to have at least liability insurance by law. It is recommended though, that you take out a comprehensive policy that will cover your vehicle for any damage.

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