Here's how you can determine how much auto insurance to buy.

4 tips to determine how much auto insurance to buy

By: James Abbey, January 18, 2016

While auto warranty options are great to have, they’re not always necessary. The same can’t be said for auto insurance. In fact, in most states, it’s required in order to register a vehicle.

Beyond the law, however, auto insurance is important to own. It provides you with the money you need if you get into an accident. The proceeds go toward the cost of fixing repairs or medical assistance if you or someone else is injured.

These aspects to auto insurance are straightforward. What’s lesser known, however, is how much you should buy, or if one type of policy is all that you’ll need after getting an auto insurance estimate. The following tips should help address these questions that you may have, whether you’re new to driving, have moved to a different state or would like to know more about the basics.

Get in touch with local insurance department

“Insurance minimums differ from state to state.”

No matter what state you live in, there’s a dollar amount requirement that stipulates the minimum amount of coverage you must own. You may have seen this on insurance quote websites. The numbers are usually represented like this as an example: $25,000/$50,000/$100,000.

The first number represents the minimum amount your policy must have for injuries if someone is hurt in accident. The second is for total injuries in an accident, and the third is for property damage. Liability insurance requirements vary, but your local department of motor vehicles should have the information you need.

Buy liability insurance
Though there are several types of auto insurance, the one that most states require is liability car insurance. Should you be at fault in an accident, liability takes care of the cost of repairs and/or injuries.

Purchase more than the minimum
Even though you’re not obligated to buy more liability insurance than what’s required, it’s highly recommended that you do so. The main reason for this is that repairs and medical costs are often much higher than what you’d expect. In 2013, the average cost per paid liability claim was $15,500, up 32 percent from $11,700 in 2005, according to estimates from the Insurance Research Council.

In other words, if your policy’s minimums are insufficient to cover the cost of repairs and/or injuries, you may have to pay the difference out of pocket.

Consider investing in comprehensive auto insurance

“Many of the scenarios liability insurance doesn’t address comprehensive insurance does.”

An insufficient amount of insurance may prevent you from covering the cost of an accident, but the wrong policy may inhibit you from even making a claim. That’s because liability insurance doesn’t provide for all causes of accidents or sources of damage. For instance, if you strike a deer crossing the road, liability may not cover the expense. If your car is stolen, that also may not be covered. This issue is corrected with comprehensive auto insurance. As its name suggests, comprehensive covers accidents that go over and above collisions, like weather-related damage, theft, fire and broken windshields.

For information on car insurance, visit the “topics” section at the Insurance Information Institute’s website. For more updates about insurance or an auto warranty quote, visit