How Much Car Insurance Do I Need?


How much car insurance do you actually need? What do all of the different coverages mean? Bodily injury or personal injury, what’s the difference?

This is a pretty boring video that we tried to make better by adding cute kids. It sort of worked…

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18 Replies to “How Much Car Insurance Do I Need?”

  1. Hi guys,

    Good topic.  When I was in college (many years ago), I remember a guest lecturer talking about insurance, and I have, for the most part, tried to follow his advice, which in a nutshell, is as follows:

    Insurance companies make money, so where the potential risk is not catastrophic (e.g., collision insurance), you should act as your own insurance company.  When the potential risk would wipe you out, you should pay a larger insurance company (e.g., Geico) to take that risk.

    Thus, like you, I purchase high liability limits and don't purchase collision or uninsured motorist insurance.  I have made an exception and purchase comprehensive (with a deductible), mainly because in Florida, any windshield damage is covered without having to pay the deductible and, believe it or not, twice I have cracked windshields putting on a Club!?!  Yes, they replaced the windshield both times (at no cost to me, but maybe my rates went up!)

    I want to note also that if you have $100K in savings and a $100K liability policy, that does not necessarily protect your savings.  It depends on the amount of damage.  If you cause $200K of damage, they will first collect the $100K from Geico, then take your $100K of savings.  

    One little issue I have had with  not having collision insurance is that if a friend wants to borrow my vehicle, I am reluctant to loan it to them, because if they get in an accident with my car, my friend may not have sufficient savings to repair/replace my vehicle (since I don't have collision insurance).  Any thoughts on this?

  2. Just a quick follow-up — if you are responsible for injuring someone, you might get sued and in that case they won't be coming after you for a few hundred thousand. They'll want a lot more, so a 100-300K limit will still not be enough. Insurance companies are now offering very reasonable umbrella policies for excess liability. As an example, you could find a 1M in coverage beyond your policy limits for just a $100 annual premium.

  3. From my 2010 experience of having to sue a GEICO customer despite him running a stop sign, being drunk out of his mind, and hitting my car with so much force (no braking) he broke the rear axle, accordioned the trunk, pushed the car almost 100', and put a groove in the road from the broken axle…insurance companies are going to fight for every last dollar.  In my case, its pretty much a slam-dunk case (though GEICO tried to get at least 5% blame on me), they would not settle.  Only after I hired an attorney were they immediately going to settle, but then I was forfeiting 33%; and we were forced to sue to make me whole (just to get back to even for $$ & lost time from work).  
    Ridiculous.  
    I share this story for your subscribers because doing an asset search is VERY easy for a litigating attorney.  Once you've saved a large amount of money, you are a target; regardless of how much insurance you have.  Why?  Because a good attorney is going to sue for maximum insurance, plus criminal restitution, plus pain & suffering, plus, plus, plus. Do I need to go on?  Also, consider 1 fender-bender causing a several car pile-up; or 1 serious or permanent injury. Your life savings and everything you've worked for could be gone because of that 1 accident (and we're not touching on paying attorney fees for a criminal case like vehicular manslaughter or negligent homicide).  

    Savers with high amounts need to structure those savings into protected or unlisted classes.  This can differ depending on the state, but generally protected are: retirement/pension plans, residing home, and basic living wages.  I would also add that trusts (separate legal entities) become a great idea; as well as LLCs owning properties, other vehicles, and toys.  Unregistered/unlisted property is another good saving vehicle, like; gold/silver coins, and cash (on hand).

  4. Hey Guys! Happy Thanksgiving! This is a good topic to discuss (boring but good :). We have recently switched our coverage limits since we sold our more expensive vehicle. We dropped collision coverage since we can pay to replace the vehicle out of pocket if needed. Our liability coverage is 100/300/50 (per person/ per accident/ prop damage per accident), medical payments are 25K/person, uninsured is 100/300/10. Any suggestions? Thanks!

  5. Hi Mike & Lauren,
    I just wanted to say good job!  I am a licensed agent in Lufkin, Texas.  I have been an agent for almost 20 years now, and started my own agency about 3 months ago.  I will say one of my biggest frustration in my career (is not "not closing my prospect"), but how many people don't understand how their coverages work.  So for instance, I love how you broke down the difference between the minimum limits of your state and showed how much it would cost to increase.  I cannot tell you how many times I have told people if they have 1 claim it could ruin their entire lives if they are not insured properly.  I'm going to share your video on our social media accounts.

    Lauren,
    You made me laugh when you paused and said, this is so boring.  Insurance is boring and complicated….but its so important to understand and I believe that you should have a good agent and talk to that agent at least once a year, if not twice a year about your personal life so your agent can help you determine the proper amount of coverage to suit your needs.

  6. For some reason Geico always gives me the highest quotes, and I shop for quotes every 6 months. So I find it interesting that you're getting insurance from them that cheap.

  7. Being self insurance if you are not a multi millionaire or business is foolish. Other words buy enough insurance to cover what your assets are. That way if you hit someone your assets shouldn't be in jeopardy. You got lucky, had you got into accident before making the Change, you entire networth would of been attacked. Leaving you with nothing or potentially bankruptcy.

  8. OK, so its important to note that personal injury coverage does not cover your medical expenses IN ANY WAY! Personal Injury, as in "personal injury attorney" covers you if you are ever held liable for an act that causes the OTHER PARTY personal injury (pain and suffering, loss of wages, etc.) For instance, if I watched this, and cancelled my health insurance and bumped the personal injury coverage on my auto insurance to $1,000,000, then realized after a major accident that personal injury doesnt cover "bodily injury" for my damaves, I could file a "personal injury" suit against "Mike and Lauren.com" for posting inaccurate insurance information, and positioning themselves as an insurance advisor without being licensed or qualified to do so. Then they might say, "We said in the very beginning that we were not licensed, or certified, or…um…like…whatever". But my lawyer will actually use that blurb about not being licensed as evidence of negligance on your part. By referencing your lack of licensing prior to advising viewers on insurance coverage, you are acknowledging your awareness that a license is required to legally and ethically provide that information, you are acknowledging your awareness that the provision of inaccurare information, or that even the misinterpretation of accurate information can lead to significant loss, and you are acknowledging that you are not qualified to provide this information to your viewers in any way that is legally or ethically sanctioned…and then you spend the next several minutes doing it anyway, and completely screwing it up, I might add.

  9. What should i get if i am trying to buy a used $10k car/ want full coverage for medical/body injury/health insurance plus covers other peoples car but one that doesn't cover my car?

  10. Cute Couple with helpful information.  With 3 small children they need to put savings into a college plan.  Remember College expense itself is only about 40% of the total cost of sending each child to college.  Hope you young people heed this advice!!!  I don't think the government is going to keep loaning money and I sure cannot pay it.  I'm retired.

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