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How To Select Auto Insurance Coverage

Updated on April 13, 2014

Choosing Your Coverage

Unlike a big screen plasma television or diamond ring, auto insurance policies have very little “wow” factor attached to them until you need to file a claim; up until that dreaded moment comes, no one is impressed by the size of yours. So just how much auto insurance do you need to purchase? Although any insurance agent will tell you that you should purchase as much coverage as you can afford, many people are driving around blissfully unaware that they are paying for coverage that they don’t need or perhaps not paying for enough coverage, thus leaving their assets vulnerable. The fact of that matter is that deciding on the right level of coverage depends on a number of factors, all of which deserve equal attention so that you don’t end up buying too much insurance or (worse yet), not enough. The questions that you will need to ask yourself when selecting your auto insurance coverage include:

  • What do I need to protect?
  • What level of coverage is required by my state, and is that enough for my particular situation?
  • What types of auto insurance coverage are available?
  • How much can I afford to spend?

Protect Your Assets

The purpose of auto insurance is to protect you from liability on the road, and hence the most important thing that you need to consider when selecting the right amount of auto coverage is what you are protecting. The coverage that you select should be high enough to cover any assets that you own that might become jeopardized if you are involved in an accident and are sued personally when someone is injured and their damages amount to more than your insurance limits cover. Your home, your business, and your savings, CDs, stocks, bonds, and so on must be protected by auto insurance. Also, if you are driving a vehiclethat is financed, or worth quite a bit of money, you also want that asset to be protected; in fact, finance companies often require that your auto insurance covers any possible peril while they still hold a lien on the vehicle. Generally speaking, if you own your own home, business, or other assets that could become vulnerable in a lawsuit action, then you need more insurance than someone who is renting an apartment and driving a vehicle that is ten years old.

compare auto rates
compare auto rates

Depending on where you live, you may need to purchase more or less insurance. The state minimum auto insurance requirements dictate the least amount of insurance that a driver must have on their vehicle in order to drive legally on that state’s roadways. When purchasing your auto insurance and determining the amount of insurance that you need, you will always be required to purchase the minimum amount of coverage for your particular state. Keep in mind that state minimum insurance, which is sometimes referred to as liability-only in many states, will not cover as much as a ‘comprehensive’ or ‘collision’ policy; for example, if you are in a single-car accident, your repairs and damages will likely not be covered. Usually, bodily injury liability will only cover the injuries that you are responsible for.

compare auto insurance rates
compare auto insurance rates

While bodily injury liability is the most basic of protection when it comes to auto insurance, there are more expensive options that cover more. Comprehensive policies covers your vehicle and oftentimes other vehicles that you might drive for losses sustained when you are not in a collision, such as when your car is stolen, vandalized, or damaged by fire or water. Collision policies cover damage to your care when you are involved in an accident with another vehicle, regardless of fault. Both comprehensive and collision policies are subject to deductibles, which is the amount of money that you will be out of pocket before your auto insurance policy “kicks in” and pays a dime. Uninsured or underinsured motorist coverage is also valuable; this type of coverage will pay for damages that are caused by drivers that you might encounter on the road who do not have insurance or do not have adequate insurance to cover your loss.

And finally, you must consider how much auto insurance coverage you can afford. Every purchase that we make in life is limited by our capacity to afford the purchase. By comparing quotes using an online comparison tool, many drivers are often surprised at how much auto insurance they can actually afford, and by how much money they can save on required insurance purchases. Using these auto insurance quote tools is easy and convenient, and takes around ten minutes to input basic information and retrieve numerous quotes from top insurers.

Taking a look at your auto insurance situation at least annually is important, although reviewing your coverage needs every six months may be ideal. A good rule of thumb is to purchase the amount of auto insurance that you are comfortable with and that protects you and your assets in the event of the worst possible scenario, while still being affordable enough to fit well within your budget.

auto insurance rates
auto insurance rates


Submit a Comment
  • adrienne2 profile imageAUTHOR

    Adrienne F Manson 

    9 years ago from Atlanta

    @Sandyspider People who drive without insurance are a mence to society!

    @opismedia Thanks for taking the time to stop.

  • adrienne2 profile imageAUTHOR

    Adrienne F Manson 

    9 years ago from Atlanta

    @Sandyspider People who drive without insurance are a mence to society!

    @opismedia Thanks for taking the time to stop.

  • opismedia profile image


    9 years ago

    Great hub Adrienne, thanks a lot for sharing it with us mortals :).

  • Sandyspider profile image

    Sandy Mertens 

    9 years ago from Wisconsin, USA

    Nice hub on selection auto insurance. We were hit once by someone who didn't have insurance. What a mess.


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