How to Calculate How Much Car Insurance You Need to Cover Your Total Assets

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    Before purchasing car insurance, make sure you know how much and what type of coverage to buy to cover the cost of your car. In addition, consider protecting your other assets, such as your house, retirement accounts, bank accounts and other assets from litigation if you cause a car accident.
    If you possess few actual assets, then you can probably get away with having state minimums when it comes to liability and the required comprehensive and collision coverage when it comes to lender requirements. On the other hand, if you possess many personal assets, then you should seriously consider purchasing more insurance than you think you might need in order to keep a driver from suing you and seizing your assets if they take you to court.
    The following information covers how much of each type of car insurance coverage you need to purchase depending on the worth of your total assets. Part 1 discusses liability coverage and Part 2 looks at comprehensive, collision, and uninsured motorist coverage.

    Part 1 of 2: Liability coverage

    Liability coverage protects you if you cause an accident with your vehicle. This type of coverage covers both property damage and bodily injury, with each state setting a minimum amount that you must carry, as detailed in this chart from ValuePenguin:
    StateDrowsy Driving Laws and Initiatives
    AlabamaNone; observes Drowsy Driver Awareness Day on November 19 each year
    AlaskaNone
    ArizonaNone
    ArkansasClassified as an offense under negligent homicide; class A misdemeanor
    CaliforniaNone; proclaimed Drowsy Driver Awareness Day on April 5, 2005
    ColoradoNone
    ConnecticutNone
    DelawareNone
    D.C.None
    FloridaNone; proclaimed Drowsy Driving Prevention Week for the first week of September
    GeorgiaNone
    HawaiiNone
    IdahoNone
    IllinoisNone
    IndianaNone
    IowaNone
    KansasNone
    KentuckyNone
    LouisianaNone
    MaineNone
    MarylandNone
    MassachusettsNone
    MichiganNone
    MinnesotaNone
    MississippiNone
    MissouriNone
    MontanaNone
    NebraskaNone
    NevadaNone
    New HampshireNone
    New JerseyConsidered reckless driving
    New MexicoNone
    New YorkNone
    North CarolinaNone
    North DakotaNone
    OhioNone
    OklahomaNone
    OregonNone
    PennsylvaniaNone; proclaimed the month of April as Distracted Driving Awareness Month
    Rhode IslandNone
    South CarolinaNone
    South DakotaNone
    TennesseeNone
    TexasNone; proclaims the week of November 6 to 12 as Drowsy Driving Prevention Week
    UtahNone; installing road signs warning against the dangers of drowsy driving
    VermontNone
    VirginiaNone
    WashingtonNone
    West VirginiaNone
    WisconsinNone
    WyomingNone
    The above represents the minimum coverage amount you need to carry by state, which should adequately cover you if you don’t have many assets. When trying to determine how much additional insurance above the minimum you might need to cover your assets, go by the following rules of thumb, according to carinsurance.com:
    • $50,000/100,000/50,000: Financial experts recommend this as the basic level of coverage as it covers drivers who have an older car and few assets.
    • $100,000/300,000/100,000: This level of coverage serves as the recommended amount by financial experts because it provides an adequate coverage level for middle-income earners who have an average level of savings in their bank account. This amount costs, on average, about $96 more a year compared to the basic level of recommended coverage.
    • $250,000/500,000/100,000: This level of coverage serves as the recommended amount for drivers who own an expensive home or who have a personal worth in the millions of dollars. In addition, many financial experts recommend that drivers with this level of coverage also opt for an umbrella liability policy to further protect their assets.

    Part 2 of 2: How much car insurance do you need? Comprehensive, collision, and uninsured motorist coverage

    When it comes to protecting your own property from damage during an accident, whether by another vehicle or other non-accident cause, comprehensive and collision coverage should provide adequate protection. In addition, uninsured and underinsured motorist coverage provide coverage even if the other driver has no insurance, which represents a worthwhile investment.
    • Comprehensive and collision coverage: Comprehensive coverage insures your car against damage from extreme weather, natural disaster, act of nature, theft, vandalism, and hitting an animal. Collision coverage covers your car if you have an accident, hit an object, or roll the car over.
    When purchasing comprehensive and collision coverage, lenders require you to carry certain levels of coverage that allow you to repair or replace your car if needed. Once you pay your car off, you must decide whether to keep comprehensive and collision coverage or not. Cars worth $3,000 or less, or if you can afford to repair or replace you car, usually do not require comprehensive or collision coverage.
    • Uninsured/underinsured motorist coverage: Uninsured and underinsured motorist coverage covers you if another at-fault driver does not have or has inadequate liability coverage. In addition, some states actually require drivers to buy uninsured motorist bodily injury coverage, as shown in this table from Insure.com:
    StateDrowsy Driving Laws and Initiatives
    AlabamaNone; observes Drowsy Driver Awareness Day on November 19 each year
    AlaskaNone
    ArizonaNone
    ArkansasClassified as an offense under negligent homicide; class A misdemeanor
    CaliforniaNone; proclaimed Drowsy Driver Awareness Day on April 5, 2005
    ColoradoNone
    ConnecticutNone
    DelawareNone
    D.C.None
    FloridaNone; proclaimed Drowsy Driving Prevention Week for the first week of September
    GeorgiaNone
    HawaiiNone
    IdahoNone
    IllinoisNone
    IndianaNone
    IowaNone
    KansasNone
    KentuckyNone
    LouisianaNone
    MaineNone
    MarylandNone
    MassachusettsNone
    MichiganNone
    MinnesotaNone
    MississippiNone
    MissouriNone
    MontanaNone
    NebraskaNone
    NevadaNone
    New HampshireNone
    New JerseyConsidered reckless driving
    New MexicoNone
    New YorkNone
    North CarolinaNone
    North DakotaNone
    OhioNone
    OklahomaNone
    OregonNone
    PennsylvaniaNone; proclaimed the month of April as Distracted Driving Awareness Month
    Rhode IslandNone
    South CarolinaNone
    South DakotaNone
    TennesseeNone
    TexasNone; proclaims the week of November 6 to 12 as Drowsy Driving Prevention Week
    UtahNone; installing road signs warning against the dangers of drowsy driving
    VermontNone
    VirginiaNone
    WashingtonNone
    West VirginiaNone
    WisconsinNone
    WyomingNone

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