There is no simple answer to the question of how much car insurance you really need. Legal requirements vary from state to state and so do recommended levels of insurance. The best answer to this question is either the legal minimum of car insurance required in your state or an amount of insurance equal to the value of your assets. Your assets are everything you own and all of money and investments you have.
A really good answer to this question is whichever is lower: the value of your assets or your state’s minimum insurance requirements. That unfortunately means that a lot of people will end up having to purchase an amount of car insurance that exceeds the value of their assets.
The best way to determine your state’s minimum requirements for auto insurance is to visit your state’s website. The state agency responsible for issuing driver’s licenses or regulating the insurance industry should have that information posted somewhere.
You should take this step before purchasing car insurance to keep from buying too little or too much car insurance. Believe it or not many people buy too much car insurance because they don’t know what the requirements are. Many others buy too little insurance because they think they only need the legal minimum.
How to Determine What Your Assets Are
For insurance purposes your assets consist of:
A really good answer to this question is whichever is lower: the value of your assets or your state’s minimum insurance requirements. That unfortunately means that a lot of people will end up having to purchase an amount of car insurance that exceeds the value of their assets.
The best way to determine your state’s minimum requirements for auto insurance is to visit your state’s website. The state agency responsible for issuing driver’s licenses or regulating the insurance industry should have that information posted somewhere.
You should take this step before purchasing car insurance to keep from buying too little or too much car insurance. Believe it or not many people buy too much car insurance because they don’t know what the requirements are. Many others buy too little insurance because they think they only need the legal minimum.
How to Determine What Your Assets Are
For insurance purposes your assets consist of:
- Any physical property that you own such as vehicles, collectibles, jewelry, business equipment, clothing etc.
- Any businesses that you own or have an interest in.
- Any intellectual property rights you may own such as copyrights, patents, trademarks etc.
- Any money that you might have in bank or investment accounts.
- Any investments you own such as stocks or bonds.
- Life insurance policies.
- Any real estate that you own.
- Any sources of income such as pensions or a salary.
- Any property or moneys that you hold jointly with your spouse or anyone else.
Be careful though because the definition of assets can vary from state to state. In Florida your home and retirement accounts are not considered assets and cannot be garnished or seized to settle a lawsuit. In most states; however, any asset you have is fair game in a lawsuit. Most people will need enough liability and other insurance to settle a lawsuit arising from a car accident. In most states that amount will exceed the minimum insurance requirements.
If you want to protect yourself from car accidents and their consequences you will need to carefully research how much coverage you need. A little research can save you a lot of money and grief when it comes to insuring your vehicles.
If you want to protect yourself from car accidents and their consequences you will need to carefully research how much coverage you need. A little research can save you a lot of money and grief when it comes to insuring your vehicles.
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