How Much Car Insurance Should I Purchase?

  1. 375 POINTS
    Tony Canas, CPCU, MBA
    Financial Leadership Rotation Program, Nationwide Insurance, Columbus, OH
    This depends on your personal situation, how much you can afford and what assets you have that you could lose in case of a lawsuit. As a general guideline state minimums are not enough and while it's cheaper to get the minimums it's a bad decision in the long term for most people. Keep in mind that even though $100,000 sounds like a lot of money to you and me, it can be exhausted very quickly in case of a major injury. If you cause an injury and you owe them more than your limit they have the right to sue you which will be VERY expensive even if you were to win the lawsuit. For most people who have a good job and are homeowners $250,000/$500,000 limits with a $1 million umbrella is a good level to aim for. I know it sounds like an incredible amount of money, but it's really not that expensive, and in the case something happens you will be very happy you're properly protected.
    Answered on March 16, 2013
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Often this question is approached by, “how much can you afford?” I would like you to think of it as, “How much can you afford to lose.” I have been driving over 50 years. I have had one minor fender bender 46 years ago. Had I never purchased insurance (in California I have the option of posting a bond or cash) I would have saved approximately $90,000. However, a recent accident involving a pedestrian struck in a cross walk resulted in a settlement of over $750,000. I couldn’t have afforded the settlement, so I paid the premiums. What can you afford to lose? Buy the insurance that will protect you from those amounts that you cannot afford to lose. If you can qualify for an umbrella consider limits in the $1-2 million range. In our lawsuit happy society that is not being overly cautious.
    Answered on May 13, 2015
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