D. Gilson is a writer and author of essays, poetry, and scholarship that explore the relationship between popular culture, literature, sexuality, and memoir. His latest book is Jesus Freak, with Will Stockton, part of Bloomsbury’s 33 1/3 Series. His other books include I Will Say This Exactly One Time and Crush. His first chapbook, Catch & Release, won the 2012 Robin Becker Prize from Seve...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Sep 29, 2021

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Just the Basics

  • Every state has different rules, regulations, and minimums when it comes to how much car insurance coverage is required
  • Being over-insured means having insurance coverage that is beyond necessary
  • There can be legal and financial implications with being over-insured

It’s bad to have too little car insurance, and it’s bad to have too much car insurance as well. The only difference is that having too much affects you more than it does your insurance company because it’s hitting your pockets — not theirs.

Knowing that all policies are not created equal is the first step to understanding insurance policies.

Every company and state has different rules and regulations when it comes to how much coverage you need and the types of coverages and add-ons they offer.

Find out if you have too much car insurance and where to find more affordable car insurance that fits your coverage needs. Enter your ZIP code above and get a free quote today.

What is being over-insured?

The definition of over-insured can vary as legalities vary, but it generally means having insurance coverage that is beyond what is necessary. Whether or not a person is over-insured can be subjective.

Each state has different regulations regarding car insurance requirements. Some states require higher minimum coverage levels than others, and sometimes even require you to carry additional coverages such as Personal Injury Protection (PIP) or Uninsured Motorist Coverage (UMC).

How to Determine if You’re Over-Insured

Determining whether or not you’re over-insured or under-insured depends on your lifestyle, your budget, and your antipathy or affinity for risks.

Use the following risk to help determine if you’re over-insured:

  • Knowing if basic liability coverage is required in your state. It is required in all states except New Hampshire
  • Knowing your state’s insurance coverage requirements
  • Not assuming you are sufficiently covered because you meet your state’s minimum requirements
  • Knowing whether you will need additional insurance coverage such as PIP. If you have health, life, and disability insurance then you may not need it
  • Being aware of how expensive accidents can be for your type of car
  • Knowing whether you have unnecessary bonus items on your insurance policy

If you’re over-insured, you would be protected against more situations, but you’d have more coverage than you would ever use, and your monthly car insurance rates would be very high.

Over-insurance can have legal as well as financial implications; it varies on many different factors.

Those are who are over-insured take a lot of financial losses and may be tempted to create a false claim to gain some of those losses back. Creating a false claim is illegal.

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How do you prevent yourself from being over-insured?

There are a few different ways that you can prevent yourself from having to deal with the consequences of being over-insured.

First, you must be sure that you have a policy with a car insurance company you trust. If you are working with someone you trust, you know they will lead you in the right direction and get you signed up for the insurance you need.

You can also evaluate your finances and be sure you are not taking out insurance that is worth more than you need.

Update your insurance policy as needed. If you have a really outdated policy, you may be paying more than what is necessary.

Avoid having comprehensive and collision coverage on a car that you consider a “beater.” If your car was totaled tomorrow and you would be able to afford to replace it immediately with no impact on your finances, then skip this coverage.

What is the minimum car insurance coverage I need?

You may be wondering how much car insurance you need for your car or if it’s bad to just carry the minimum coverage of car insurance. Each state has minimum coverage requirements, so depending on the state you reside in, that will be your minimum coverage requirement.

More coverage may be added if you have a lease or loan; you must check your lender’s requirements.

Lastly, you must determine the value of your assets: the value of the car, home, and business; and your savings account.

The value of your assets is important if you are involved in an incident. If damages exceed your insurance coverage and you’re found at fault for an accident, a court could order you to make up the difference. The cost of additional insurance is minimal compared to the financial impact the damages could have.

Why do I need car insurance?

There are many different reasons you may need car insurance. Overall, there are three main reasons:

  1. Legality: States requiring liability insurance at a minimum
  2. Financial Protection: Ensuring your insurance company will get most bills associated with any damages
  3. Lender Requirements: Lender will likely require more coverage than your state’s minimum

If you’re ready to buy car insurance or change your coverage levels, enter your ZIP code below and get free car insurance quotes from local providers today.