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Auto insurance is an essential part of owning and driving a car, but deciding how much to get can be challenging. In this article, you’ll learn about different coverage options and how to determine the amount of car insurance to fit your needs and budget.
Some states require car insurance in order to operate a vehicle, so you don’t have to be a reckless driver to be at risk when you get behind the wheel. As long as there are other drivers on the road, there is the possibility of a crash, and with that comes the financial risk of property damage and medical expenses.
And when the cost of a car crash can range from a couple hundred dollars to millions, it’s no laughing matter.
But here’s the good news: Car insurance is designed to help protect drivers from bearing that financial burden alone. How much help you get depends on the types and amount of coverage you choose.
Talk with your AAA insurance sgent to help find out which type of coverage is best for you and your family.
Learn moreWe often talk about car insurance as if it’s one size fits all. But the truth is there are many different types of coverage, each with its own capabilities and limits, and you can combine them to create a policy that fits your specific needs and risk tolerance.
If you cause a car crash, you may be held responsible for others’ medical expenses and property repairs. Liability insurance helps shoulder those costs. Most states (and lenders) have minimum coverage requirements for bodily injury liability and property damage, although you may choose to pay for more coverage.
In a car crash caused by a driver with little or no insurance, uninsured/underinsured motorist coverage can help pay for property damage, as well as medical bills if you or your passengers are injured. It may also be used if you are the victim of a hit-and-run crash.
Of course, you don’t have to be driving your car for it to be damaged. Theft and vandalism; weather-related damage from hail, flooding or falling objects; hitting an animal or road debris—all of these can be expensive. Fortunately, that’s where comprehensive coverage may come into play.
For vehicle damage from a driving-related incident such as a parking lot fender-bender or an unexpected pothole, you need collision coverage.
Where liability coverage only pays for others’ medical expenses in a crash where you’re at fault, medical payments insurance covers medical costs for you and your passengers, regardless of who’s at fault. You’re also covered if you are a passenger in someone else’s car or if you’re injured as a pedestrian.
Personal injury protection, or PIP, coverage is similar to medical payments coverage because it also covers medical expenses for you and your passengers, no matter who’s at fault. However, it can also help pay for lost wages, funeral expenses and more.
Every state has different requirements for car insurance. Some require only auto liability coverage, while others may also require coverage for uninsured motorists or medical payments. The minimum coverage requirements vary widely by state, ranging from:
If required in your state, coverage for uninsured/underinsured motorists can range from:
Of course, you can carry more coverage than the minimum requirement—in fact, many people do.
If you choose to carry additional insurance coverage such as comprehensive or collision coverage, you’ll have to pay a deductible. That’s the amount you pay out of pocket before your insurance coverage kicks in to help. The average auto insurance deductible is $500. You may be able to choose a higher or lower deductible if you prefer, but keep in mind that a lower deductible will increase your premium while a higher one will decrease it.
The types and amounts of car insurance you carry will also depend on your personal needs, budget and risk tolerance. Here are a few things you may want to consider:
Full coverage isn’t actually a type of insurance coverage. It simply refers to an auto insurance policy that includes auto liability, comprehensive, collision and uninsured motorist coverages. For a full coverage policy, insurance agents typically recommend a 100/300/50 liability policy, meaning:
With full coverage car insurance, your vehicle is covered for a variety of situations—whether damage is caused by a collision or other incident, regardless of whether you’re at fault or not.
While full coverage is not a requirement in most states, you may find that your lender requires it if you finance or are leasing your vehicle.
If your vehicle has been totaled in a crash or other covered incident, your insurance company pays the actual cash value of your vehicle, minus your deductible.
But what if that payment is less than what you owe on your car loan? Without cash on hand, you could be in trouble—unless you have GAP coverage. GAP stands for Guaranteed Asset Protection, and it covers the gap between what you owe and the actual cash value of your car. While not required, this add-on coverage can give you greater peace of mind.
On the other end of the spectrum, minimum liability coverage is just what it sounds like: the bare minimum required by law. While this is usually the cheapest car insurance option, it does leave you exposed to financial risk.
Make no mistake—the consequences of driving without auto insurance can be legally and financially devastating: license and registration suspension, fines, reinstatement fees, vehicle impoundment and even jail time, not to mention paying out of pocket for car repairs and medical expenses if you're in a crash. Of course, if you’re not able to pay, you could get sued, and then all your assets could be at risk.
Here are some of the more practical reasons why you need car insurance:
With car insurance through AAA, you can find coverage that fits your needs and budget while giving you peace of mind when you hit the road.
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Coverage is subject to all policy terms, conditions, exclusions and limitations. Discounts and savings opportunities subject to eligibility requirements. Subject to underwriting requirements. AAA Insurance is a collection of AAA branded insurance products, services, and programs made available to qualified members. Personal lines insurance is underwritten by Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Group Insurance Company, Auto Club Property-Casualty Insurance Company, The Members Insurance Company, Universal Insurance Company, Auto Club South Insurance Company, or Auto Club Insurance Company of Florida. ©2025 The Auto Club Group. All rights reserved.
