What Automobile Insurance Coverages Do I Need?

by David

auto insurance, car buying

There are several choices that you need to make when choosing your Auto Insurance coverage. Make sure you understand the coverages that are available to you and make an informed decision on what you carry.

Do not only rely on your insurance agent to make all the recommendations. Here’s what you need to know.

Liability Coverage Limits

This is often overlooked and is the most important part of your auto insurance coverage. Liability, is the limits that your insurance company will pay to another person for damage that you cause to their property or their body. This is broken down into 2 main categories Property Damage and Bodily Injury.

Bodily Injury
For Bodily Injury I recommend carrying a minimum of $100,000 / $300,000. This means that you insurance company will pay a maximum of $100,000 per person up to a maximum of $300,000 per incident.

I personally carry $250,000 / $500,000 plus an additional umbrella policy.

Property Damage
For Property Damage I recommend carrying a minimum of $100,000. This is the maximum your insurance carrier will pay for damage you cause to the property of others.

A multi-car pile up on the interstate could add up fast if multiple cars are totaled and you are at fault. The cost for this coverage is minimal and may only cost you as little as 50 cents a month to go from 50k to 100k in Property Damage liability.

In addition to the liability coverages mentioned above you will have liability coverage called Uninsured Motorist Coverage. This covers the damage that someone else cause to your body or your vehicle if they are uninsured. Simply put, it protects you from those who drive without insurance.

This is an actual problem in some states (Tennessee for example) because they do not require people to show proof of insurance to get their license plate tags even though by law insurance is required. Take this coverage and at the same amounts that you have for your bodily injury an property damage liability.

Medical Payments

The next coverage you will need to decide on is called Medical Payments. This coverage is optional and pays for the medical bills sustained by anyone who is hurt while riding in your vehicle. It is not necessary to have this coverage, but it may not be a bad idea to have 5k or so in this area.


Collision coverage pays to fix your vehicle should you be at fault in an accident. If you feel the value of your vehicle is worth insuring, then you should consider this coverage.

For those of you who have older vehicles, you may want to forgo this coverage. For example, if your vehicle is worth $1000, and your collision coverage is $500 per year, you may want to self-insure for your $1000 car.

If you do carry this coverage, you will need to decide on a deductible amount. This is the portion you will be responsible to pay in the event of an accident. The lower your deductible, the higher the premiums are for this coverage. If you are a safe driver, you may want to consider a higher deductible to save money.


Comprehensive coverage covers acts of God. For example, a rock shoots off the back of a truck and cracks your windshield, your car is stolen, etc. This coverage is typically inexpensive and also has a deductible attached.

You may want to carry a lower deductible here as it does not save much money to go with a higher one. Additionally, some companies do not surcharge for comprehensive claims, so you should not be scared to file one.

Rental Reimbursement

This is another optional coverage and is purely personal preference. If you would need to rent a car should yours be involved in a wreck and you cannot afford to pay for the rental out of your pocket, then take the coverage. For those of you who have a second vehicle to drive or can self-insure for the cost of the rental car, this coverage is not necessary

Towing & Labor

Again, this is an optional coverage that will offer some type of re-reimbursement should your car need to be towed. The re-reimbursement amount is typically low around $50 depending on the carrier.

Please make sure to check with your individual insurance carrier and seek their advice before making any changes to your policy. Additionally, your individual state may differ in terms of what is and is not required by law.