How much car insurance coverage do I need for a new car?

You probably already know that you need insurance when you buy a new car. However, the amount of insurance you need can be confusing, especially if you’re unfamiliar with the types of car insurance coverage available for purchase.

There are several factors to consider when you need insurance. For example, nearly every state has a minimum liability requirement. Some states also require uninsured motorist or personal injury protection insurance. You’ll also likely need more insurance on a financed car.

You can learn more about your coverage options below, including what you’ll need before you can legally drive. Then, compare rates with as many companies as possible to make sure you get the most affordable policy.

Read More: Buying Car Insurance for Your New Car

Minimum Car Insurance Requirements by State

When you’re in the market for car insurance, the first place you should look is your state’s minimum car insurance requirements. Besides Virginia and New Hampshire, every state requires at least liability car insurance before driving or registering a car. Check below to see how much insurance you need in your state.

When shopping for coverage, you’ll need to meet at least the minimum coverage car insurance requirements. The good news is that minimum insurance is affordable and your cheapest option.

What happens if you drive without car insurance?

Driving without insurance in a state requiring it can have disastrous consequences. There are two types of insurance violations: being unable to prove coverage and driving without it. You’ll face much lighter consequences if you have insurance but can’t prove it.

Deciding to get behind the wheel of your car without insurance can result in the following penalties:

• Tickets and fines
• Vehicle impoundment
• Car insurance rates increase
• License or registration suspension
• License reinstatement fees
• Jail time
• SR-22 car insurance requirement

The specific consequences of driving without insurance vary by state, but most drivers must pay a fine, face license suspension, and SR-22 forms.

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Should you buy more than the minimum car insurance in your state?

While many drivers benefit from buying more than minimum insurance, it’s not always necessary. A good way to tell if full coverage is worth the price is to consider your deductible cost compared to your car’s value.

For example, paying for full coverage might not make sense if your car is worth $2,000 and your deductible is $1,000. Learn more about the best full coverage car insurance rates.

However, most drivers benefit from more coverage. To get an idea of what types of insurance might be right for you, consider the following coverage types.

What types of car insurance should you buy?

Minimum insurance isn’t always enough. Drivers with a car loan or lease usually must get full coverage, which includes the following:

• Bodily injury liability. Bodily injury liability pays for damages resulting from injuries to others when you’re at fault in an accident.
• Property damage liability. Property damage liability covers damage you cause to cars, buildings, and other property. It doesn’t cover your vehicle.
• Comprehensive insurance. Comprehensive insurance covers unexpected events that damage your car, including fire, floods, vandalism, theft, and animal contact.
• Collision insurance. Collision insurance pays for your car repairs after an accident, regardless of fault. It also covers you if you run into a stationary object, like a mailbox.
• Uninsured/underinsured motorist insurance. While most states require car insurance, not everyone follows the law. Uninsured motorist insurance protects you from drivers without coverage, insufficient coverage, and hit-and-runs.
• Personal injury protection/medical payments. Medical bills after an accident can be costly, but personal injury protection or medical payments insurance helps pay for them.

Full coverage offers valuable protection for your car, but it’s not the best fit for everyone. For example, if your vehicle is older or less valuable and you own it outright, you can probably skip full coverage insurance.

Additional Car Insurance Options

Aside from the standard car insurance options, you can purchase other add-on coverages to increase your policy’s value. Some of the most popular options include:

• Roadside assistance. Roadside assistance rescues you when you get stranded with a flat tire, dead battery, or empty gas tank. Most companies also include locksmith services in their roadside assistance plans.
• Rental car reimbursement. If your car gets stuck in the repair shop after a covered incident, this coverage helps pay for a rental car while you wait.
• Original parts and equipment. This coverage allows for original replacement parts from your car’s manufacturer instead of aftermarket parts. People who modify their vehicles should consider original parts and equipment insurance to protect their investment. Here’s a list of car insurance companies offering OEM parts coverage.
• GAP insurance. If you total your car but owe more on its loan than the vehicle’s value, you’ll be stuck paying for something you no longer drive. GAP insurance pays the remainder of your loan.

Most major insurance companies offer these add-ons and several others to increase your car’s protection. However, be cautious about adding coverage to your policy — add-ons can significantly increase your insurance rates.

How much does car insurance cost?

Insurance companies look at various factors to determine your rates, including your age, location, driving history, credit score, and car type. However, you can get an idea of how much you might pay by looking at the average insurance cost in your state. Find out what factors affect car insurance rates.

As you can see, there are some significant differences between states. Some states have higher insurance rates due to extreme weather risks, while others have higher coverage requirements.

Regardless of how much average insurance costs are in your state, there are plenty of ways to save. If you’re trying to stay on a budget, compare car insurance quotes, take advantage of discounts, and choose the right deductible.

How much should your deductible be?

When you file a car insurance claim, your deductible is the amount you need to pay before your insurance kicks in. Your liability insurance doesn’t include a deductible, but most other types of coverage have one.

When you sign up for a policy, your insurer will ask you to choose a deductible. Most companies offer deductibles between $100 and $2,000. If you choose a higher deductible, your monthly rates will be lower. However, you’ll run the financial risk of paying more if you need to file a claim.

Find the Right Car Insurance Today

Finding the right amount of car insurance might seem confusing, but it doesn’t have to be difficult. If you need more information about your coverage options, an insurance representative can help.

Once you know how much insurance you need, your next step should be comparing quotes. By looking at as many companies as possible, you’ll be able to find the best policy for your needs.

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Case Studies: Determining Car Insurance Coverage for a New Car

Case Study 1: State Minimum Coverage

John purchased a new car and wants to meet the state’s minimum car insurance requirements. In his jurisdiction, the state mandates a minimum liability coverage of $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $10,000 for property damage. John opts for the state minimum coverage to fulfill the legal requirements.

Case Study 2: Comprehensive Coverage With Collision Insurance

Sarah values the protection of her new car and wants coverage that extends beyond the basic liability insurance. She chooses to add comprehensive coverage and collision insurance to her policy. This ensures that her car is protected against damages caused by events such as theft, vandalism, natural disasters, and accidents.

Case Study 3: Full Coverage With Higher Limits

Mike wants extensive coverage to safeguard his new car and provide additional peace of mind. He selects full coverage, which includes liability insurance, comprehensive coverage, and collision insurance. Moreover, Mike decides to increase the liability limits beyond the state minimums to ensure adequate protection in case of an accident involving substantial damages.

Case Study 4: Optional Coverages for Enhanced Protection

Samantha decides to enhance her coverage beyond the standard options. She adds optional coverages such as uninsured/underinsured motorist coverage, personal injury protection, and roadside assistance. Samantha prioritizes comprehensive protection for her new car and personal well-being.

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