How to Figure Out How Much Car Insurance You Need

How do you go about figuring out how much car insurance you need? It's a topic most of us could use some help on. Well, I'm going to shed some light on car insurance right now.

1. First you'll need to figure out what kind of car insurance is going to best fit your needs. Ask yourself these questions: Am I insuring a regular old daily driver type vehicle; or is this a collector car or exotic car that is driven on a limited basis? Also ask yourself if you're a homeowner. If you are a homeowner do you have an umbrella policy?

2. If this is a regular vehicle that you drive to and from work in and you just want regular car insurance then an Actual Cash Value (ACV for short) or Stated Value policy will work for you. If you have a classic or collectors type car or an expensive exotic vehicle then you should definitely go with Agreed Value. Only an Agreed Value policy can guarantee in the event of a total covered loss that you'll get the value that you pre determined with the insurance company that the vehicle is worth. You can also increase the value on an agreed value policy as the years pass and your vehicle appreciates, just call your insurance company and let them know you need to increase the value. If you get a stated or ACV policy on a valuable vehicle you will probably get less than what you anticipated if the vehicle was lost due to a theft, fire, bad accident etc as there is no legal guarantee of the value of the vehicle when you get the polciy.

3. Now that you have an idea of if you need a stated, ACV or Agreeed Value policy, you'll want to think about your limits. Typically if you are a homeowner you should probably have higher than state standard limits. State standard limits are the minimum liability and often uninsured motorist limits that your state requires that you carry. When you call an insurance company or go into an agent's office they can tell you what the minimum limits for your state are. Really, if you are a homeowner, you should have the highest limits that you can afford. When pricing insurance the agent can give you different quotes for different limits. The reason you should have higher limits if you are a homeowner is so that if you are in an at fault accident you don't get sued and potentially lose your home. Which brings me back to umbrella policies..

4. If you are a homeowner, especially one with a decent net worth or assets, you should have an umbrella policy. It protects you up to 1 million dollars or even higher. If you have an umbrella policy through your homeowners insurance you are probably required to have a 250k per person 500k per accident or 500k combined single limit on your auto insurance too. If you think you have an umbrella policy contact that agent before getting auto insurance to make sure you are meeting their minimum liability and uninsured motorist requirement for the umbrella policy.

5. Bottom line: I do not think people can be overinsured. You never know what life will bring and that's what insurance is for: the unexpected. Agreed Value is super important for a valuable vehicle. Also companies that sell agreed value policies are going to be prepared to handle a claim on a collector vehicle because that's what they specialize in. Don't settle for the state standard (minimum) limits your state makes you get. Often it will only pay out 15k towards the other person's injuries if you are involved in an at fault accident which isn't much. At least get a quote on higher limits, you will probably be pleasantly surprised at how much more coverage you get for a few more dollars a month. Try getting a quote with Progressive or Esurance, they are good companies. See below for their links.