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How much auto insurance do you need?

Before jumping in and getting auto insurance quotes, revisit how much you need. Some people say "just give me the state minimum amount," or the lowest priced policy. In California, that's 15/30/5. Bodily Injury for $15,000 for death or injury of 1 person in an accident, $30,000 for all victims in any 1 accident. Property Damage of $5,000 for any 1 accident.

That's would be a no brainer, except for the unpredictably of accidents. 1 Minor surgery in California is $15,000. And there's no guarantee an accident won't be your fault. Or the adjusters, police, or biased witnesses decide it's your fault. Or a certain % might be your fault. Comparative negligence.

You can't dictate the severity of an accident. Well maybe you can, by obeying the speed limit and driving defensively.

Even if an accident is not your fault, what if the other driver is uninsured or underinsured? Your bills have to be paid by someone. Uninsured motorist is a must, since around 20% of drivers are so broke they can't afford a policy. Even though we do not have debtors prisons, who wants to take a daily barrage of phone calls from debt collectors?

You can reduce your auto insurance premiums like most people by getting bare bones, liability only coverage. But is it worth covering only a minimal accident? Instead of starting off with the lowest required state minimums, consider what you have to lose in an accident.

In you are at fault in an accident, your insurance company will pay the damages up to your chosen limits, and anything above your limits, you will have to pay. Needless to say, your rates will go up.

Since I want to keep my stuff, I want high limits. I have some income and assets left I would like to protect, I have 100/300 in coverage. That means if I cause bodily injury, I am covered (minus my deductible) to $100,000 per person and $300,000 total per accident. If the economy goes back and I start doing well, I might increase that to $250,000/$500,000 in comprehensive, usually the highest limits you can get besides adding an umbrella policy.

But I am a safe driver, speed limit, rarely run *pink* lights, etc. Now if you are a habitual drunk driver, even if you have not gotten caught, you need high limits. Because you will eventually hurt yourself or someone else. Or get lucky and just destroy your car and driving record. Really, you need to examine your personal life and confront problems head on. No one has ever drank their way out of a problem. Sorry, I have a family members that's had 2 DUIs and we're waiting till they kill themselves or someone else.

Back in 1607 E. Topsell (whoever was that?) said penny wise, and pound foolish. Do not save on auto insurance, just to get screwed in an accident because your limits are too low. The irony is you cannot expect the unexpected.

So I chose the upper range coverage with higher deductibles, since I am a safe driver. I don't like overpaying for insurance, and accidents are unexpected, but my 6 month premium is a fixed cost. I chose to have rental car coverage, in case my car is totaled or in the repair shop.

I am 40+ years old and holding. If you were a student, or broke, or both, you could use the bare minimums. But keep in mind, legal judgments you have against you now last for 10 years and can be renewed without limit.

And if you cancel your insurance in California (and most other states), they suspend your registration and you'll have to pay a reinstatement fee. Get pulled over in California without insurance and you could pay a fines of up to $500 plus penalties, impoundment of the vehicle and suspension of the driver's license.

Go to my page about explanations of coverage page to learn more about insurance terms and how the benefits work.

In summation, even if you are broke now, think about your future potential to earn and your assets when deciding about your much auto limits. With a more comprehensive policy, you may save may in the form of in court fees, wage garnishments, co pays, etc. Read auto insurance answers.

In review:

• Get more than the State Minimums
• Get uninsured / underinsured motorist
• If you are broke, minimums are better than no coverage

Written by Craig J. Casey

Financial Writer helping people with their insurance problems on the net since 1998.

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