How much car insurance do you actually need?

Start with what the law asks

Almost every state requires liability insurance: it pays for the damage and injuries you cause to other people. Each state sets its own minimum limits, and a few also require personal injury protection (PIP) or uninsured motorist cover. Your state's insurance department publishes the exact minimums.

The minimum is the floor, not a recommendation. If you cause a serious accident, the costs can go far past a minimum limit — and what the policy does not pay, you may have to.

Then what your lender asks for

If you lease your car or still owe money on it, the lender almost always requires collision and comprehensive cover (often called "full coverage") and may set the highest deductible you are allowed to choose. Check your loan or lease contract.

Liability limits, in plain words

Limits are usually written as three numbers, such as 100/300/100: up to $100,000 for one person's injuries, up to $300,000 for all injuries in one accident, and up to $100,000 for damage to property. Higher limits protect more of your savings and future income.

When cover for your own car is worth it

Collision pays to repair your car after a crash; comprehensive pays for theft, weather, fire and glass. Both come with a deductible — the part you pay first. On an older car worth little, the yearly cost of these covers plus the deductible can approach what the car is worth. On a newer or financed car, they usually make sense.

• Could you replace or repair your car out of pocket tomorrow?
• Do you have a loan or lease that requires it?
• Would a higher deductible lower the price enough to be worth the risk?

Ask Pete

Tell Pete about your car and how you use it, by voice or chat, or fill in the short form instead. When an insurer's offer matches your profile it shows on screen right away; the others arrive by email.