text: Determining how much insurance you need to be fully protected and fit into your budget is a tricky task. Many factors come into play when answering this question. Things like state minimums, lender requirements, and the value of your assets are all considered when determining the answer.
  How much car insurance is enough?
  The answer to this question will vary wildly depending on many factors and opinions, one of the major factors being the state minimum auto insurance coverage requirements. Most states require drivers to carry auto insurance, but the coverage minimums vary by state.
  On average, the most common state coverage minimums are $25,000/$50,000/$25,000. So that means $25,000 in bodily injury per person, $50,000 in total per accident, and $25,000 in property damage per accident. These insurance coverages relate to your liability in an accident and do not cover damage to you or your car.
  Some coverages, like personal injury protection and underinsured and uninsured motorist coverages, are highly encouraged, but most states do not have these as requirements. Financed and leased vehicles are often required to carry comprehensive and collision coverages by the lenders.
  While these are often enough to get you by legally, the state minimums are just that, minimums. They may not be what you truly need.
  So then, how much do I need?
  Like the above question, this is not a very simple question to answer because it will vary for everyone (and quite frankly, we always encourage you to speak to your agent because they are your local insurance experts. They can help explain exactly what YOU need). However, it is something you can figure out. To better understand this, we’ll break it down into sections of your car insurance policy.
  - Liability Coverage. This coverage protects you from any injuries or damage you may be legally liable for as the result of an accident. To ensure that you have enough, it is recommended that you carry enough to cover any valuable assets you have. Essentially, you want these limits to be higher than your net worth.This is calculated by adding up the value of all your assets, like your home and vehicle, plus any savings and investments, then subtracting any debts, and you have your net worth.So, for example, if your net worth is around $95,000, then a liability of $100,000 would be enough to protect your assets on paper. However, we encourage considering inflation and other expenses that could change over time, so raising that number will offer better future security as a safety net.
  Liability coverage is broken into two main categories:
  - Bodily Injury. This coverage falls under the liability section of a policy and covers medical bills and other damages that you may be liable for in the event of an accident.
  - Property Damage. Like bodily injury, this one is best measured against your net worth and what you stand to lose. Some states have minimums and maximums for this one, so what you choose is ultimately your decision.
  - Personal Injury Protection. This coverage (the exact name can change by state) is also variable, as many states do not require it, and if you have health insurance, it will step in. A good rule of thumb for determining your need is to look at how high of a deductible you have on your health insurance and make sure you have enough to cover that. However, you may also wish to raise this limit as it can step in for lost wages, funeral costs, or childcare.
  - Uninsured or Underinsured Coverage. This coverage steps in if you are in an accident with someone who either does not have enough insurance or is not insured at all. Generally speaking, it is recommended that this coverage matches your liability limits.
  - Comprehensive and Collision Coverage. These are designed to protect your vehicle in the event of a collision, contact with an animal, storm damage, theft, etc. These limits are generally set on a per-vehicle basis and match market value, so they are not adjustable in most cases. However, you can adjust their cost by altering your deductible to higher or lower.
  Extra peace of mind to consider.
  Now, you meet all the requirements of both the state you live in and the lender you may be working with, but what about fitting your financial situation? In the event of a total loss, do you have the cash flow to replace your vehicle with one that suits your needs?
  Bringing that peace of mind is where we come in. We offer a wide range of endorsements and add-on coverages that can help ensure you have all the coverage you want as well as need. Some additional add-ons you may want to consider are:
  - Rental Car Coverage.1 This coverage, technically named Transportation Expenses, is designed to ensure you receive a rental car to keep you on the road while your car is being repaired. It is completely optional, however many find this coverage to be a bit of a life saver when suddenly facing not having a vehicle for an extended period of time.
  - Roadside Service.2 From lockouts, flat tires, and dead batteries to run out of gas, even the most perfectly maintained cars may have an unexpected breakdown that leaves you stranded on the roadside. This helps cover the expense of retrieving you and your vehicle in these situations.
  - Auto Security.3 This auto endorsement ensures you have adequate coverage to replace your new ride should it end up totaled. With this endorsement, if your new car (less than two years old) is totaled, it will be replaced with the newest model year. If your vehicle is older than two years, it will be replaced with a model up to two years newer than your current model. This endorsement also has coverage for if you lease your vehicle and it gets totaled; coverage is provided for the difference between the actual cash value of the auto and the amount due under the terms of your lease or loan.
  - Personal Umbrella Insurance. 4 Also known as personal catastrophe liability insurance, this is a separate insurance policy that gives you and your family an extra layer of protection above the limits in your auto, homeowners, or even boat policy.
  Determining how much you need to bring you peace of mind can be a complicated puzzle to piece together, and honestly, opinions vary wildly on this question. Luckily, you don’t have to answer it alone. Reach out to your local insurance agent and let us help you put the pieces together to ensure you get all the protection you need for a price you can afford!
  ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York). The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.
  The insurance products and rates, if applicable, described in this blog are in effect as of January 2024 and may be changed at any time.
  Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions.
  The insurance products and services described in this blog are not offered in all states. ERIE life insurance and annuity products are not available in New York. ERIE Medicare supplement products are not available in the District of Columbia or New York. ERIE long term care products are not available in the District of Columbia and New York.
  Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.
  Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.
  Article originally posted on www.erieinsurance.com(opens in new tab)
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