How Much Car Insurance Do I Need?

By the Mercury Team

Every driver has different needs when it comes to auto insurance, and one of the most common questions that arises when looking for a provider is “how much car insurance coverage do I need?”

“Several factors are used to determine the best auto policy coverage for you and your vehicle, but ultimately the decision boils down to determining how much protection a driver wants,” said Kevin Quinn, vice president of claims and customer experience at Mercury Insurance. “That level of risk is going to vary from driver to driver, depending on their vehicle’s type, age and level of use, so the best way to determine how much car insurance you’ll need is to talk to your agent.”

It’s important to understand the differences in auto insurance coverage options to determine what insurance coverage you’ll need.

• Liability protection, which is required in nearly every state, pays for damage caused to others – other drivers, pedestrians, other vehicles, public or private property – if you’re at fault in a covered loss.
• Collision protection covers damages to your vehicle incurred as a result of a covered loss, regardless of who is at fault.
• Comprehensive coverage protects you in the event that your vehicle is damaged by non-collision events, such as vandalism, theft, falling objects, damage caused by animals, civil disturbance and damage from a fire, flood or other covered peril.

A Mercury agent will get to know you and can help identify the right coverage and limits package, whether it’s a liability-only policy or something more comprehensive,” adds Quinn.

Consider, for example, a college student driving their older sibling’s hand-me-down “well-loved” car. Their deductible (the amount of money paid out-of-pocket when using insurance coverage, regardless of who is at fault in an accident) is likely to be higher to keep their monthly car insurance payments within their price range. Purchasing both comprehensive and collision may not be justifiable, depending on the value of their vehicle. Choosing not to add additional coverage may make sense to save money on the auto insurance policy, but ask yourself whether those savings are enough to offset the risk of potentially having a large repair or replacement bill.

A working professional who just financed a new car is another story. Lienholders generally require you to carry collision insurance so the automobile is covered regardless of who causes an accident. The professional may opt for a higher monthly policy payment to keep their deductible lower, especially if they’re planning to save up to purchase a house. Additionally, they may want comprehensive insurance, since the value of their vehicle is likely more expensive to repair or replace than they want to spend.

Drivers carpooling to school or soccer practice will need to consider having more coverage than a typical driver. Drivers living in urban areas with high auto theft and vandalism makes having comprehensive coverage more important than if they reside in less populated rural locations. Living and driving in places with harsh winters, packed interstates and narrow streets makes collision coverage critical due to the increased likelihood of being in an accident. Also, if you own a home, a business or have other assets to protect, consider increasing your liability limits or buying an umbrella policy since you have more to lose in a serious accident, which may affect your family.

Retirees who bought their dream car will want to protect it. These more-established drivers may want to include comprehensive coverage to keep their dream car safe from the possibility of a falling tree branch or windshield damage. Taking joyrides around town rather than commuting to the office every day also might mean that their insurance could cost less, allowing these drivers to get more of the coverage they need without sacrificing their retirement plans.

Whatever your situation, speak with an insurance agent to get all the information you need to make an educated decision. Insurance can be confusing, but a highly trained, professional Mercury agent is your best resource for auto insurance coverage recommendations at the best price. Mercury sells insurance through independent agents so you can be sure you’ll get excellent advice and a coverage package specifically tailored to meet your needs. 

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FAQs

What if I’m still paying off my car?

While you are making payments on a car, lienholders generally require you to carry collision insurance so the automobile is covered regardless of who causes an accident. If your car is paid off, you have the option to keep the same coverage or you can save some money and drop collision. Just remember, this means you may take on the risk of having to pay out-of-pocket for any damages to your vehicle not covered if you’re involved in an accident.

How much should my deductible be?

The deductible you choose is the amount you agree to pay when you use your collision or comprehensive coverage, regardless of who is at fault in an accident. A higher deductible lowers your monthly insurance rate; however, it increases the amount you will pay out-of-pocket in the event of a loss. Your deductible will be waived or reimbursed if the accident was caused by another party and they have accepted liability for the loss.

What impact does my location have?

Your location can be a factor in determining the coverage you choose. Living in urban areas with high auto theft and vandalism makes having comprehensive coverage more important than if you reside in less populated rural locations. In places with harsh winters, packed interstates and narrow streets, collision coverage is critical due to the increased likelihood of being in an accident.

Does the type of car I drive impact my insurance?

An old pick-up truck with lots of miles doesn’t always need the same coverage as a brand-new convertible. Depending on the value of your vehicle and whether or not you’re still making payments for it, purchasing comprehensive and collision may not be justifiable. In these situations, it may make sense to save the money, but ask yourself whether the savings are enough to offset the risk of potentially having a large repair or replacement bill.

What can I afford?

Cost may be foremost in your mind, but when it comes to insurance, peace of mind can be equally important. Look for a plan that protects you while trying to keep within your budget. Mercury offers a variety of insurance discounts, ranging from good student to multi-car, which makes protecting your vehicle more affordable.

How much do I have to protect?

If you own a home, a business or have other assets to protect, consider increasing your liability limits or buying an umbrella policy since you have more to lose in a serious accident. Conversely, if you rent an apartment and own an older car, you may not need as much coverage.