Car accidents, unfortunately, are a common risk in everyday life in America. On average, the United States sees 6 million car accidents per year. Furthermore, statistics say that the average driver will be involved in 3-4 car accidents over the course of their lifetime. Therefore, this data definitely answers the question, “Do I need car insurance?” because you do not want to be the one responsible for paying for damage to vehicles out of pocket.
But, there are so many options when it comes to car insurance coverage many drivers find themselves asking, “How much car insurance do I need?” The answer to that question is far less black and white and truly depends on your individual needs as a driver. Many factors affect the amount of car insurance you should carry, including what state you live in, what type of vehicle you drive, and how much insurance or risk you can afford.
So to help answer the question of how much insurance you should carry for yourself, here’s a look at a breakdown of how much insurance is required, how much is recommended, and additional options that are available to you.
Mandatory Minimum Amounts
If you are behind the wheel of a vehicle, then you need insurance. It’s actually the law. There are state minimums in every state that outline exactly how much car insurance coverage you are required to carry in each particular state, but all 50 states require that drivers carry some amount of property liability insurance at a minimum. Most states also require bodily injury liability insurance, and about half of all states require underinsured/uninsured motorist insurance.
To be legally insured in Arizona, you must carry at a minimum:
- $15,000 in property damage liability insurance
- $25,000 in bodily injury liability for one person/ $50,000 for two or more persons
Requiring that every driver on the road carries property damage liability insurance ensures that if you are in an accident that is not your fault, you will not have to pay for all the repairs yourself. Additionally, if someone is harmed in the accident, bodily injury liability insurance ensures that some portion of the medical bills are paid for. These requirements help to keep your pocket safe.
While it is only mandatory to carry the state minimum insurance, we always recommend that you carry much more insurance coverage because it is very easy and commonplace to exceed the minimum amounts, in which case, you will be on the hook to cover the cost out of pocket.
For instance, if you only carry the state minimum in property damage liability and you are in an accident where you are at fault, you will have to pay to repair or replace your own vehicle on your own. Worse yet, if the other vehicle sustains damage that exceeds the state minimum or if there are multiple vehicles in the accident, you could see yourself in court if they attempt to cover the excess damage or injuries. Therefore it is better to carry more than the mandatory minimum. Experts recommend carrying at least $100,000 in property damage liability and $300,00 in bodily injury coverage per accident.
There are also additional types of coverage that protect you and your property, such as collision coverage, comprehensive insurance, uninsured/underinsured motorist coverage, and medical coverage such as personal injury protection (PIP) that can help cover lost wages or Medpay.
It is wise to carry all of these coverages. You should carry collision coverage that covers the cost of your vehicle if it is under lease or a loan. Or, if you own your vehicle outright, collision coverage will help to cover the cost if it is significantly damaged or totaled. You should also carry comprehensive coverage that will cover your vehicle if non-accident-related damage occurs, such as a tree branch falling on your car or a rock hitting your windshield. Underinsured motorist coverage will protect you if you are hit by a driver who is illegally uncovered by insurance or who does not carry enough coverage. Additionally, medical coverage will help pay your medical expenses if you do not have health insurance.
For these types of coverages, you do not choose the amount of coverage in dollars, but you choose the deductible you are willing to pay. If you are worried about monthly costs, you can select coverage at a high deductible which will lower your monthly cost. Or, if you are more concerned with paying a high lump sum if an accident occurs, you can choose a low deductible and pay more with your monthly insurance payments. Deductibles are typically between $250-$1000, depending on the coverage you wish to have and the amount you’d like to pay.
Above the mandatory minimums and recommended coverage, you can also choose to carry various additional policies. Rental car coverage is available if you need a rental car while your car is being repaired, and gap insurance covers the total amount of your car loan if what you owe is more than what the car is worth if it is totaled. Roadside assistance is also a good investment in instances where you need towing, flat-tire replacement, or if you lock your keys in your car. If you drive for a rideshare company such as Uber or Lyft, there is also rideshare insurance coverage available to cover specific instances when you are working.
These optional coverages are not required but may be very helpful to carry if you find yourself in any of these scenarios. In many cases, these coverages are offered at low monthly costs and may be worth considering.
How Do I Choose the Right Coverage?
Researching the amount of insurance you should carry can be a daunting task because there are so many options to choose from. In many cases, it can also be challenging to understand exactly what each policy offers. Therefore we recommend saving yourself the trouble and working with a professional when choosing the right coverage for you. But we do not recommend meeting with an insurance agent representing a single company. While they may genuinely have your best interest at heart, they can only offer you the plans they have available, which may be limited or more expensive than you should be paying.
At Independent Insurance Brokers Arizona, not only do we take the time to listen to your specific needs and explain the different types of insurance that you may need, but we can also shop around with different carriers to find the exact plans that fit your needs at the price points that work best for you. We are not limited to the plans available at one specific company but can see all the plans available in your area from over 40 national and local companies. So we are sure to find the best coverage for you.
If you have any questions about how much car insurance you need, schedule an appointment to talk to one of our team members today.