Do I need car insurance?
Thats an easy yes, whether because of state law or just financial protection.
How much car insurance do I need?
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That can be trickier to answer.
Do I Really Need Car Insurance?
While the monthly premium may be unattractive, youre better safe than sorry when it comes to your vehicle.
All states but Virginia and New Hampshire legally require residents to carry car insurance.
Virginians can avoid carrying insurance for an annual fee of $500 paid to the Department of Motor Vehicles.
New Hampshirites arent messing around with their Live Free or Die motto.
The same is true in Virginia.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help…
In short: Driving without insurance can lead to financial ruin.
How Much Car Insurance Do I Need?
The easy answer to the question, How much car insurance do I need?
is most drivers should get full coverage.
This coverage typically includes liability, uninsured/underinsured motorist, and collision/comprehensive.
Someone who works from home or lives in a two-car household can probably forego rental reimbursement.
Folks in the 31 states that only require liability can consider skipping all other car insurance coverage.
And those with an emergency savings account can go with a high-deductible plan.
Did you know?
Otherwise, you risk financial ruin.
By doing this, your house, savings, etc.
are protected in case you are at fault in an accident.
Liability insurance is typically described with three numbers representing dollar amounts, separated by slashes.
However, most financial experts suggest that middle-income drivers opt for the 100/300/100 coverage.
Collision insurance covers damage to your vehicle regardless of who is at fault.
Collision coverage carries a deductible.
Comprehensive insurance also covers damage to your vehicle but when it isnotbeing driven.
Like collision coverage, comprehensive carries a deductible.
Do I need it?That depends.
Comprehensive is especially important in areas prone to flooding or wildfires.
The higher the deductible, the cheaper the coverage.
You should opt for the highest possible deductible that you might afford.
A note on deductibles:To keep insurance costs down, opt for higher deductibles.
This will save significant chunks of change each month.
As a savvy Penny Hoarder, you should create anemergency savingsaccount specifically for auto accidents.
Just note that in that case your insurance wont cut you a check for totaling out your vehicle.
PIP usually has a deductible.
If you have no health insurance, it could be a good idea.
Opt out if your state does not require itandyou have good health insurance and disability insurance.
Guaranteed Auto Protection (GAP)
Guaranteed auto protection (known as GAP) protects your investment.
GAP insurance is there to, well, fill in the gaps.
Once the vehicle is paid off, it is up to you if you want to continue GAP insurance.
Common options include:
Looking for more ways to save on car insurance?
Check out some of ourtips for cutting costs on your auto insurance policy.
Timothy Moore is a personal finance writer and Certified Financial Education Instructor.
He covers banks, loans, insurance and taxes for The Penny Hoarder.
Find his work on sites such as USA Today, Business Insider and Forbes.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…