Expert: Richard Hixenbaugh - 5/28/2011

Question
It's time to renew my car insurance policy! How do I know how much coverage I need? I have a feeling I've been getting ripped the past few years. I assume I should take the following into account: my income (none), assets (none) , the value of the car now (16,238), my age (27), whether I own or rent a home (rent), whether a car is financed (yes), etc. However, I don't know how much weight to give each factor. Any ideas? I'm especially looking for a Web site that will allow you to enter the data like I mentioned above and automatically generate recommendations for you.

Answer
Hi John,

I'm not aware of any website that will recommend amounts of auto insurance coverage you should have. I will try to give you some suggestions.

Insurance 101 - The Basics of Auto Insurance Coverage
Below is a brief description of general policy language, it's meaning and an explanation of the coverage. Insurance coverages and laws vary from state to state. This information is not meant to be all encompassing.  For specific coverage information in your state, contact your local licensed insurance agent or contact your state insurance department

Bodily Injury Liability Is coverage for injuries that you cause to others that you become legally liable to pay for. Your policy will pay for these injuries to others up to the limit of the policy, which you determine at the time you purchase the policy.

Property Damage Liability Is coverage for damage to the property of others, caused by you that you are legally liable to pay for. Your policy will pay the cost to repair or replace this property up to the limit of your policy which you determine at the time you purchase the policy.

Uninsured Motorist / Underinsured Motorist Is coverage you purchase to protect yourself from those who for whatever reason, do not have liability coverage (or enough coverage) at the time they would become legally liable to you. Coverage can be purchased  for bodily injury and  in some states property damage as well..

Medical Payments Is coverage for minor injuries to persons injured in your vehicle. This coverage may be purchased in amounts usually ranging from $500.00 to $10,000.00

Comprehensive Is coverage for damage to your vehicle caused by such things as theft, fire, hail, hitting a deer, etc... Your policy will pay for the cost to repair or the (ACV) actual cash value, if the vehicle is determined to be a total loss, less the comprehensive deductible that you chose at the time you purchased the policy.

Collision Is coverage for damage to your vehicle caused by a collision or upset. The policy will pay for the cost to repair or the (ACV) actual cash value if the vehicle is determined to be a total loss; less the collision deductible that you chose at the time you purchased your policy.

Towing  Is coverage to have your vehicle towed in the event of a mechanical breakdown. The policy will usually reimburse you for these charges up to the limit of coverage you designated at the time you purchased your policy, usually $50.00 to $100.00

Rental Is coverage to provide you with a replacement vehicle while your vehicle is being repaired due to a collision or comprehensive claim. It will pay a daily rate selected by you at the time you purchase the policy, usually from $15.00 to $50.00 per day. There is also generally a limit on the number of days or a maximum dollar amount that will be paid.

Since the car is financed you must have Collision & Comprehensive. If you take time to fully understand the esplanations above, you should be able to decide how much coverage is right for you. However I would recommend no less than 50/100/50 for your liability coverage and your uninsured motorist coverage and get a $500.00 deductible on your comprehensive & collision.

I hope this helps
Richard Hixenbaugh