Auto Insurance Calculator

The Auto Insurance Calculator answers a different question than a quote engine: not "what will my premium be?" but "how much liability coverage should I carry, and is my full coverage still worth paying for?" Enter your net worth and car value, and it recommends bodily-injury and property-damage liability limits scaled to what you have to protect, tells you whether an umbrella policy enters the picture, and checks your comprehensive and collision premium against the classic 10%-of-car-value rule.

How the Liability Recommendation Works

Liability coverage exists to protect your assets from a judgment, so the recommendation anchors to net worth, with floors at common policy levels:

$\text{BI per Person} = \max(\$100{,}000,\ \text{Net Worth}) \qquad \text{BI per Accident} = \max(\$300{,}000,\ \text{Net Worth})$

$\text{Property Damage} = \max(\$100{,}000,\ \text{Net Worth})$

The result is presented in the standard split-limit notation used on declarations pages — for example 250k/500k/250k means $250,000 of bodily-injury cover per person,$500,000 per accident, and $250,000 of property-damage cover. When your net worth passes **$500,000**, the calculator flags that standard auto limits run out of road and an umbrella policy — inexpensive excess liability cover that sits above your auto and home policies, typically in $1M increments — is the appropriate next layer.

Worked Example 1: The Floors Bind

Net worth $180,000**: per-person BI = max($100k, $180k) = **$180k; per-accident BI = max($300k,$180k) = $300k** (the floor binds here); property damage = **$180k. Recommendation: 180k/300k/180k, no umbrella flag. The floors matter most for lower net worths — even someone with $30,000 of assets gets at least 100k/300k/100k, because a serious at-fault accident generates claims sized by the victim's losses, not by your balance sheet, and wage garnishment reaches future income too.

Worked Example 2: Net Worth Drives, Umbrella Appears

Net worth $750,000**: all three figures scale to **$750k — recommendation 750k/750k/750k — and because net worth exceeds $500,000, the result adds the umbrella note: standard limits alone no longer match what is at stake. In practice this is how umbrella policies are sold: carry the highest underlying auto limits the carrier offers, then stack$1M+ of umbrella above them for a few hundred dollars a year.

The Full-Coverage Check (Comprehensive + Collision)

Separate logic answers whether insuring your own car still makes sense:

• You have a loan or lease balance: the advice is simply required — your lender mandates comprehensive and collision until payoff, whatever the percentage says.
• Paid off, with a premium entered: the calculator computes premium ÷ car value. At 10% or more, it advises considering dropping full coverage; below 10%, keeping it.
• Paid off, no premium entered: it prompts you to enter your premium to run the check.

Two illustrations: a $12,000 car with a$1,450 comp-and-collision premium = 12.1% of the car's value every year — the drop advice triggers; you are pre-paying an eighth of the car's worth annually to insure it. A $28,000 car at$1,900 = 6.8% — keep. The logic of the 10% rule: above it, a few claim-free years of premiums approach the maximum the policy could ever pay out (the car's value minus deductible), so self-insuring starts to win for anyone who could absorb the loss.

Limitations

This is a coverage-adequacy framework, not a premium estimator: it does not price policies and takes no account of age, record, location, vehicle type, or credit — the things that actually drive quotes. The net-worth anchor is a rule of thumb; households with high future earnings but low current assets (a young surgeon) may need more cover than their balance sheet suggests, and judgment-proof households may rationally carry less. State minimum limits, uninsured-motorist cover, and medical payments are outside the recommendation — never drop below legal minimums, and treat the umbrella threshold as a prompt for a conversation with an agent, not a purchase rule.

Frequently Asked Questions

Why tie liability limits to net worth?

Because liability claims are how net worth gets taken. A judgment beyond your policy limits attaches to your assets and, in many states, your future wages. Scaling the limits to what you own — with floors, because claims do not scale down for poorer defendants — keeps the cover proportional to the exposure it protects against.

What exactly is an umbrella policy?

Excess liability insurance, usually sold in $1 million units, that pays after your auto or homeowners liability limits are exhausted, and often covers claim types the underlying policies exclude. It is comparatively cheap because it is rarely triggered — which is precisely the severity profile insurance is for. The calculator flags it once net worth passes$500,000, the point where standard auto limits commonly stop being sufficient.

Should I drop collision on an older car even below 10%?

The 10% test is a screen, not the whole decision. Also weigh the deductible against the car's value (a $1,000 deductible on a$3,000 car caps the real benefit at $2,000) and, decisively, whether you could replace the car from savings without derailing your finances. If replacement would be a crisis, keep the coverage; the rule assumes a loss you can absorb.