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How much insurance do you need for an older car?


What types of coverage do you need?
The value of your car may be low, but it's still important to keep it well insured -- the value of the damage caused by an accident could be high.
The value of your car may be low, but it's still important to keep it well insured -- the value of the damage caused by an accident could be high.
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The insurance coverage minimums required by law vary from state to state, but every state -- except New Hampshire -- requires liability insurance. To determine how much insurance an older car will need, let's start there.

Liability insurance includes bodily injury liability, which covers expenses incurred by other people in an accident, as well as property damage liability, which covers damages to property owned by someone else.

Although bodily liability coverage can be as low as 10/20 (industry shorthand for $10,000 per person/$20,000 per accident), a typical coverage amount -- even for older cars -- is 100/300 ($100,000 per person/$300,000 per accident). This means that if one person was injured in an accident, it would cover up to $100,000 of their medical bills; however, if five people were injured, it would only cover up to $300,000. "It's incredibly important to have in the event of an accident; otherwise, the healthcare expenses could be financially crippling for you," Schrage says.

The amount of property damage liability you need depends on your net worth, which is the value of your assets minus your liabilities. You should opt to carry at least enough of this liability insurance to pay for damages to property owned by someone else. In most cases, this will probably be another driver's vehicle, but it could include other property, too. For example, if your car jumps a curb and you take out your neighbor's privacy fence -- or living room -- property damage liability will cover that.

Uninsured motorist coverage is required by law in most states, and offers financial protection if you're not at fault in an accident and the other motorist doesn't have insurance.

Comprehensive insurance, while not often state-mandated, is so inexpensive that it makes sense to include it in your coverage, says Schrage. It will provide some financial insulation if there are damages to your car from non-accident situations, such as theft, vandalism and fire.

Collision insurance covers damages to your car in case of an accident. "When selecting an amount of coverage, you definitely need to factor in the value of your car. Most experts recommend dropping collision coverage after your car is eight years old, because the associated premium just isn't worth it," Schrage adds.


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