Ask yourself these 6 questions to see how much car insurance you need
Take CNBC Select's six-question quiz to see how much car insurance you really need.
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.Geico auto coverage is available in all 50 states and the District of Columbia. It offers 16 discounts and a variety of optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.Progressive offers an array of riders, including rental car reimbursement, rideshare insurance and a Deductible Savings Bank that deducts $50 from your deductible each policy period you go without a claim.
All U.S. states except New Hampshire require drivers to have some level of liability car insurance to pay for damage or injuries to others. The amount of bodily injury and property liability coverage, however, is different from state to state.
The 12 states with no-fault insurance laws also require drivers to get personal injury protection (PIP) or medical payment (MedPay), which cover medical expenses for you or your passengers after an accident, regardless of who is found to be at fault.
Twenty-two states and Washington, D.C., require drivers to have uninsured/underinsured motorist (UM/UIM) coverage, which protects you financially if you're in a collision with someone who doesn't have enough insurance or no insurance at all.
Collision coverage pays to repair or replace your car if it hits another car or object, regardless of who is at fault.
Comprehensive coverage covers non-collision events, like theft, vandalism, hail, failing tree branches and fire.
While comprehensive and collision coverage aren't mandated by law, most lenders require borrowers to have them if they're still making payments on a loan or lease.
If your car is totaled or stolen, a standard insurance policy will only reimburse you for the actual cash value of the vehicle, which takes depreciation into account. (New cars can lose as much as 20% of their value in their first year.)
If you're still paying off your car, especially if you made a small down payment, gap insurance can cover the difference between the vehicle's value and the amount you still owe on it.
According to the Insurance Information Institute, gap insurance is a good idea if you:
Adding gap insurance only increases full coverage premiums by about $20 to $60 a year, according to the III.
Your dealership may offer gap insurance, but it's usually cheaper through an insurance company. Travelers is known for its affordable rates and offers discounts if your car is no more than three model years old.
The best way to estimate your costs is to request a quote
Yes
Travelers auto insurance policies are affordable and backed by the sixth largest company for car insurance by market share according to the NAIC. The company also offers a number of discounts to customers, including discounts for bundling, owning a hybrid or electric car, and good student discounts.
Nationwide allows drivers to purchase gap coverage on cars that are up to six years old.
The best way to estimate your costs is to request a quote
Yes
Nationwide offers near-nationwide availability and personalized services, such as On Your Side® Review, a free annual insurance evaluation to ensure you are adequately protected and are taking advantage of any discounts available to you.
Terms apply.
If you're leasing, check your lease agreement before adding gap insurance: It may already be included in the lease price.
If you own your car outright, you don't need gap insurance.
Full coverage is a good idea for most car owners and is usually required if you have a loan or lease. But if you own your car outright and it's only worth a few thousand dollars, a full coverage policy might be overkill.
The rule of thumb is to drop collision and comprehensive coverage if your car is worth less than 10 times your annual premiums.
If, for example, you have a car worth $5,000 and your comprehensive and collision coverage costs more than $500 for the year, it may not be worth keeping comprehensive and collision coverage.
You can check the value of your car with Kelley Blue Book, the industry standard for pricing.
Your net worth is the sum of all of your assets minus all your debts. Determining this amount will give you a good indicator of how much liability coverage you need.
The minimum insurance requirement in many states may not be enough to cover all the expenses you could accrue after an accident: In Connecticut, for example, drivers need $25,000 in bodily injury liability per person and $50,000 total per accident, as well as $25,000 property damage per accident.
Let's say you're held liable for a crash that seriously injures four people and totals their $50,000 SUV. If their medical expenses are $20,000 per person, you've already exceeded your $50,000 per accident limit for bodily injury liability by $30,000 and your property damage limit by $25,000.
You could be sued for the balance, as well as pain and suffering, and would have to pay for it out of pocket. Depending on where you live, that could involve emptying your bank account, liquidating your investments and even selling your car or house. But having adequate liability coverage protects your assets.
If your net worth is higher than the limits your car insurance company offers, umbrella insurance can cover you for liability claims up to millions of dollars.
One of our top picks for umbrella insurance is American Family Insurance, which has coverage of up to $5 million.
The best way to estimate your costs is to request a quote
Undisclosed
Yes
American Family has a wide variety of umbrella policies available, including personal coverage, commercial coverage and coverage for ranches and farms. It's also highly rated for auto and home insurance.
In some cases, insurers may try to upsell you on coverage you don't need, like roadside assistance or protection for mechanical breakdowns.
Many credit cards offer roadside assistance, including the Chase Sapphire Reserve® (see rates and fees), Chase Freedom Unlimited® (see rates and fees) and Capital One Platinum Secured Credit Card.
On Chase's site
On Chase's site
New cardholders receive a 0% intro APR for 15 months from account opening on purchases and balance transfers.
Good to Excellent670–850
18.99% - 28.49% variable
$0
Earn $250 cash back
See rates and fees. Terms apply. Member FDIC.
Read our Chase Freedom Unlimited® review.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
3% of each transaction in U.S. dollars
If your card does, buying it from your insurer is redundant. (If you have AAA or belong to another motor club, you also probably already have access to roadside assistance.)
Mechanical breakdown insurance (MBI) acts like an extended warranty, paying for unexpected engine issues, transmission failures and faulty electrical systems. An MBI add-on to a full coverage policy averages between $30 and $100 a year.
These policies have strict requirements regarding the age, mileage and condition of covered vehicles. They don't generally cover routine maintenance, normal wear-and-tear or cosmetic repairs.
And if your car is still under warranty, it covers much of the same territory.
This number breaks down the amount of bodily injury coverage a policy has per person, per accident and the amount of property damage it covers per accident. A 100/300/100 covers up to $100,000 of bodily injury coverage per person at up to $300,000 per accident, and up to $100,000 of property damage per accident.
A good liability limit for car insurance is one that meets your net worth, which is the sum of all of your assets minus any debts you owe.
Full coverage car insurance is a package that includes liability, comprehensive and collision car insurance. While it is more expensive than just getting liability coverage on its own, getting all three coverages is often required by loans and lease terms.
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every car insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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