How Much Auto Insurance Should I Buy?

How Much Auto Insurance Should I Buy In New York?

While you are required to meet New York's minimum coverage requirement, there are no specific rules regarding the amount of additional coverage you should buy. Only you can decide what protection best meets the needs of you and your family. To learn more about exact costs or savings, or to discuss your policy with one of our licensed agents, please email Customer Service or contact us at 800-437-8394.

Bodily Injury Liability
Property Damage Liability
Uninsured/Underinsured Motorist Coverage
Other than Collision (Previously known as Comprehensive)
Collision

Bodily Injury Liability

What Bodily Injury Liability Covers:
If you or another driver covered by your policy is involved in an auto accident that causes an injury or fatality to another person, this coverage pays for claims for which you are legally responsible.

Amount of Bodily Injury Liability Coverage:
It is important to have enough Bodily Injury Liability coverage. It is possible that the other party (or survivors) will sue you, and in the event that you are found legally liable for the injuries, you will be required to compensate the injured party. If your Bodily Injury Liability Coverage is lower than the amount awarded to the other party, you may need to forfeit your existing assets (home, car, savings), as well as some of your future earnings, to satisfy the judgment. Below are three typical household situations and the lowest limits of Bodily Injury Liability coverage that we believe each should consider.

Situation #1: New York Homeowner
Your home may be your family's biggest asset. But you may also have savings, a 401(k) plan or other assets. For example, Mr. and Mrs. Smith own a one family home and have two teenage drivers. They own three cars.

In this situation, by not having enough coverage, you risk the equity in your home (if you are forced to sell your home to pay a judgment against you), any other assets you may own, and your future earnings. Consider a minimum coverage of $100,000/$300,000 ($100,000 per person, $300,000 per accident).

Situation #2: High Net Worth Individual or Family
You own a combination of stocks, bonds, mutual funds, 401(k) plan, and real estate, which may include your home, a second home and/or investment property. For example, Ms. Phillips has been working for the same company for 25 years and has developed a significant stock portfolio and a sizeable 401(k) account at work.

In this situation, by not having enough coverage, you could be forced to sell part or all of your assets as well as pay future earnings to satisfy any judgment against you. Consider a minimum of $100,000/$300,000. A limit of $250,000/$500,000 may be even more appropriate, and you may wish to consult your accountant if your net worth is considerably higher.

Situation #3: Recent College Graduate
You own a few assets and have a lot of college loans to pay off. For example, Mr. Jones graduated college three years ago and is an engineer at a Fortune 500 company. He has four more years of college loans to pay off.

In this situation, by not having enough coverage, you put at risk your future earnings, especially if your job has prospects for steady pay increases. With limited assets and significant monthly expenses, consider minimum coverage of $50,000/$100,000 to start, and then increase it to $100,000/$300,000 as your income goes up and your loans are paid down.

Property Damage Liability

What Property Damage Liability Covers:
If you or another driver covered by your policy are involved in an auto accident that damages the property of others, Property Damage Liability covers claims for which you are legally responsible. Most often the damaged property would be another party's auto. Other examples of property damage include real estate and the contents of the other party's automobile.

What Property Damage Liability Covers:
We suggest that everyone carry at least $50,000 of Property Damage Liability. If you would have difficulty paying a higher judgment out of your own pocket, you may wish to consider $100,000 of coverage. Higher limits usually cost just a few dollars extra per year, and provide the protection of higher coverage. For example, Mr. Loss slid on some ice and hit a new Mercedes that could not be repaired. The Mercedes was worth $65,000. Mr. Loss carried $25,000 of Property Damage Liability, so he will have to pay the $40,000 difference that is not covered by his policy.

Uninsured/Underinsured Motorists Liability

What Uninsured/Underinsured Motorists Liability Covers:
If you are in an auto accident caused by the negligence of another driver who has no insurance or not enough insurance, then Uninsured/Underinsured Motorists Liability will cover you for any injuries or fatalities to you or others.

Amount of Uninsured/Underinsured Liability Coverage:
Other insurance, such as no-fault coverage, medical insurance, or disability/salary continuation insurance from your employer may pay some of your expenses. Take these into consideration when you determine how much coverage you need. We suggest that you consider Uninsured/Underinsured Motorists Liability Coverage equal to your Bodily Injury Liability limits if you do not have other insurance protection.

For example, Mr. White sustained severe injuries in an accident in which the other driver was clearly at fault but had no insurance or assets. Mr. White was unable to work for one month, he lost $5,000 in income and incurred $40,000 in medical expenses. Mr. White had purchased the minimum Uninsured Motorists coverage, $15,000/$30,000, and his coverage paid $15,000 of his $45,000 total loss. His state's mandatory no-fault coverage paid for some medical expenses and income loss up to limits specified in his policy. His medical insurance covered the expenses above the $15,000 the Uninsured Motorists coverage paid. His salary continuation plan at work covered most of his salary for the month of work he missed.

Other Than Collision (Previously Known as Comprehensive)

What Other Than Collision Covers:
Other Than Collision pays for damage that occurs to your vehicle that is not the result of a collision; for example, damage by fire, theft, windstorm, and vandalism. The amount of coverage available is equal to the actual value of your auto minus the deductible amount you choose to pay.

Amount of Other Than Collision Coverage:
When determining the amount of Other Than Collision coverage, you should consider how likely it is that your car will be stolen or vandalized. Is it parked in a safe place at home and at work? Find out the cost savings at each deductible level (the lower the deductible, the higher the cost) and then decide if you would prefer to carry a higher deductible.

Collision:

What Collision Covers:
Collision pays for damage to your auto caused by impact with another vehicle or object; for example, impact with trees, telephone poles, and buildings. The amount of coverage available is equal to the actual value of your auto minus the deductible amount you choose.

Amount of Collision Coverage:
If you can afford a higher deductible, you will lower your premiums. If you and the other drivers covered by your policy are careful drivers, you may decide to choose a higher deductible after you compare the premium savings to the likelihood of damage. Keep in mind that if the other driver involved in the accident is mostly at fault, you could get some or all of your deductible back from the other driver's insurance carrier. If your car is very old and no longer has much value, this coverage may not be of value to you when you consider the premium cost.


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