This is a question we get asked all the time. And there is no exactly right answer. The simple answer is: it depends. Another great answer is, as much as you can afford!
The whole purpose of insurance is to protect you from the unknown. It is impossible to predict when an accident might occur, and how much damage it will cause. Insurance is all about peace of mind. You buy insurance to put yourself at ease so that if an unfortunate accident occurs, your insurance company will pay for the damages, not you.
All 50 states in the United States require that drivers have some minimum automobile insurance coverage. It is important to understand, however, that the minimum required insurance will rarely cover the damages that result from even a relatively minor accident. California’s minimum requirement is only $15,000. With medical expenses and pain and suffering damages, car accidents very often cause far more than just $15,000 in damage. If you are found legally responsible for a car accident, and the damages are more than what your insurance covers, you are personally liable for paying the difference out of your own pocket. You can see why only having the minimum required coverage does not really satisfy the peace of mind purpose of insurance.
At Karns & Karns, this is why we recommend buying as much auto insurance as you can comfortably afford. We don’t mean for that to sound glib. We say it because it is good advice. Minimum insurance does not buy peace of mind. The decision of how much insurance you can comfortably afford is a complicated one. We recommend that you speak to an insurance agent about tailoring your insurance coverage based upon your personal needs and financial condition. Talk to your insurance agent about other types of insurance that can be purchased together with an automobile policy. For example, an umbrella policy or an excess policy can be a great option. This type of policy will kick in and cover you when your underlying automobile insurance coverage is all used up. Also, umbrella policies are usually much less expensive than purchasing additional auto insurance, and they cover a broader range of negligence.
Finally, a word about Uninsured/Under-Insured Motorist coverage (UM/UIM). Unfortunately, many drivers on the road have minimum policies or no automobile insurance at all. If you get hit and injured by one of these drivers, there may not be enough insurance coverage to pay for your damages. Like we explained above, $15,000 does not go very far. Even worse, if the driver who hits you is completely uninsured, there will be no insurance to cover any of your damages at all. At Karns & Karns we strongly recommend purchasing UM/UIM coverage. This type of insurance covers your damages if you are hit by a driver with little or no insurance. Other drivers on the road cannot be relied upon to have adequate insurance or any insurance at all. This is why we strongly recommend you purchase the highest amount of Uninsured/Under-Insured Motorist coverage you can. It is some of the cheapest insurance out there, and will give you that peace of mind.