How Much Car Insurance Do I Actually Need?
 Written by Preston Micalizio Preston MicalizioPreston Micalizio writes insurance content for SmartFinancial. He brings three years of professional experience writing ... Read more |  Edited by Richard MurphyRichard MurphyRichard Murphy manages content on SmartFinancial's website. With a strong background in content strategy and copywriting... Read more |
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Car insurance is required by law in almost every state, meaning you must maintain at least the minimum amount of coverage mandated by your state government. In addition, you will likely want to consider purchasing a car insurance policy with additional coverage types and higher coverage limits, with the exact right amount of coverage varying from person to person.
Keep reading for more information about how much car insurance you need, including what the legal requirements are for each state and how much coverage experts often recommend.
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Key Takeaways
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How Much Car Insurance Do I Really Need?
You’ll need to meet your state’s minimum car insurance requirements to drive legally, but this may not be enough coverage to protect you in an accident. A general rule of thumb recommended by insurance professionals is to buy a 100/300/100 liability insurance policy, meaning $100,000 in bodily injury liability coverage per person injured in an accident, $300,000 in bodily injury liability coverage to split among all of the people injured in a single accident and $100,000 in property damage liability coverage.[1]
Alternatively, you could buy a policy with a combined bodily injury and property damage liability coverage limit that is equal to your net worth to protect your assets from a liability lawsuit. If you have a particularly high net worth, you could also purchase umbrella insurance to obtain extra liability coverage in $1 million increments.
Teen Drivers
It’s advisable to raise your coverage limits if you are adding a teenage driver to your auto insurance policy, especially for your liability and collision insurance. Since teens are inexperienced behind the wheel and may be on the road frequently, they are more likely than other age groups to get into car accidents.[2]
Senior Drivers
Senior drivers who have retired and started driving significantly less may be able to lower their coverage limits, although they should note that they may still be at an increased risk for car accidents when they are on the road due to the slower reaction times that come with age. In addition, if you are driving an older vehicle, you may want to consider dropping your comprehensive and collision coverage once your car’s value has depreciated to less than 10 times the amount you pay for the two physical damage coverage types.[3]
How Much Car Insurance Do I Need Where I Live?
Every state sets requirements for the amount of minimum liability insurance coverage you must carry, often using an A/B/C format to express minimum requirements:
- A: The maximum amount your policy pays for bodily injury per person
- B: The maximum your policy pays for total bodily injury per accident
- C: The maximum your policy pays for property damage per accident
Some states may also allow for a combined single limit — a total dollar amount of liability coverage that you need to cover all related expenses after an accident. Some states may also require additional forms of car insurance aside from liability coverage, such as personal injury protection (PIP) or medical payments coverage (Medpay). Below, we’ll go over the minimum coverage types and limits you are legally required to purchase in each state.[4]
|
State/District |
Minimum Liability Requirements |
Other Minimum Requirements |
|---|---|---|
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25/50/25 |
N/A |
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50/100/25 |
N/A |
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Arizona |
25/50/15 |
N/A |
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25/50/25 |
N/A |
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California |
30/60/15 |
N/A |
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25/50/15 |
N/A |
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Connecticut |
25/50/25 |
25/50 UM/UIM |
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Delaware |
25/50/10 |
15/30 PIP |
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25/50/10 |
25/50/5 UM |
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$10,000 property damage liability only |
$10,000 PIP |
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Georgia |
25/50/25 |
N/A |
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20/40/10 |
$10,000 per person PIP |
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25/50/15 |
N/A |
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25/50/20 |
25/50 UM (UIM required only on policies that exceed minimum limits) |
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25/50/25 |
UM/UIM coverage is automatically included but may be rejected in writing |
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20/40/15 |
N/A |
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25/50/25 |
25/50 UM/UIM and the following PIP requirements:
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Kentucky |
25/50/25 or $60,000 single limit policy |
$10,000 per person PIP |
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15/30/25 |
N/A |
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50/100/25 or $125,000 single limit policy |
50/100 UM/UIM and $2,000 per person Medpay |
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30/60/15 |
30/60/15 UM/UIM (PIP required only on policies that exceed minimum limits) |
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20/40/5 |
20/40 UM and $8,000 per person PIP |
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Michigan |
50/100/10 |
$250,000 PIP (drivers on Medicaid or Medicare who meet certain criteria can have lower coverage limits) and $1 million in property protection insurance (covers damage to another person’s property, excluding moving and improperly-parked vehicles) |
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30/60/10 |
25/50 UM/UIM and $40,000 per person PIP |
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25/50/25 |
N/A |
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25/50/25 |
25/50 UM |
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25/50/20 |
N/A |
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25/50/25 |
25/50 UM/UIM |
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Nevada |
25/50/20 |
N/A |
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Financial responsibility or 25/50/25 |
Financial responsibility or 25/50 UM/UIM and $1,000 Medpay |
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New Jersey |
25/50/25 for standard policies or $5,000 property damage liability only for basic policies |
UM/UIM with coverage limits less than or equal to your liability coverage limits for standard policies and $15,000 per person PIP for both standard and basic policies |
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25/50/10 |
N/A |
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25/50/10 (plus 50/100 for wrongful death) |
25/50 UM and $50,000 per person PIP (plus a $2,000 death benefit) |
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30/60/25 |
30/60/25 UM (UIM required only on policies that exceed minimum limits) |
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25/50/25 |
25/50 UM/UIM and $30,000 per person PIP |
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25/50/25 |
N/A |
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25/50/25 |
N/A |
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25/50/20 |
25/50 UM/UIM and $15,000 per person PIP |
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15/30/5 |
$5,000 PIP (also known as first-party medical benefits) |
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25/50/25 |
UM/UIM required only on policies that exceed minimum limits |
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25/50/25 |
25/20/25 UM |
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25/50/25 |
25/50 UM/UIM |
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Tennessee |
25/50/25 |
N/A |
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30/60/25 |
N/A |
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Utah |
25/65/25 |
$3,000 PIP |
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25/50/10 or $115,000 in self-insurance |
50/100/10 UM/UIM |
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Virginia |
50/100/25 |
UM/UIM coverage is automatically included but may be rejected in writing |
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25/50/10 |
N/A |
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25/50/25 |
25/50/25 UM |
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25/50/10 |
25/50 UM |
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25/50/20 |
N/A |
How Do I Choose the Right Amount of Car Insurance?
There are various factors to consider when deciding how much car insurance coverage you need. For example, you should weigh factors that indicate how likely you are to need to file a car insurance claim, such as how much you drive and the rate of car crashes or uninsured drivers in your area.
You should also determine whether you could afford to replace your own vehicle or anyone else’s out of pocket after a total loss. New cars cost $49,740 on average as of December 2024, so you could be left underinsured if you don’t have at least $50,000 worth of property damage liability insurance.[5]
In general, you may want to purchase a full coverage policy that includes all of the coverage types required by your state, along with collision and comprehensive coverage, which lenders often require. Depending on your specific coverage needs, consider adding other optional coverage types.
Is Car Insurance Required?
Drivers are required to have auto insurance in the District of Columbia and most states. The only exception is New Hampshire, where drivers can forgo coverage if they have enough money to meet the state’s financial responsibility requirements.[6]
What Types of Car Insurance Are There?
Below, we’ll cover the major types of car insurance you must purchase or may have the option to add to your auto insurance policy, depending on your state requirements.[4]
|
Coverage |
Description |
Example |
Required? |
|---|---|---|---|
|
Bodily Injury Liability |
If you were the at-fault driver, it covers another person’s medical bills, lost wages and funeral expenses, plus legal fees if they sue you |
You rear-end a car at a stop sign, and the other driver experiences whiplash |
All states but FL and NH |
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Property Damage Liability |
Pays for repairs to another person’s car, home or belongings if you crash into them, plus repairs to any public property you crash into |
You swerve to avoid running over a squirrel and crash into a parked car |
All states but NH |
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Collision |
Pays for repairs to your car after colliding with another vehicle or object, regardless of who was at fault |
Your back bumper falls off after you accidentally back into a tree |
No states |
|
Pays for repairs to your car after external perils, like fire, hail, vandalism and theft |
The interior of your car is ruined during a flood |
No states |
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Uninsured Motorist (UM) |
Pays for your medical expenses and car repairs if you are hit by someone who doesn’t have car insurance or if you can’t identify the driver after a hit-and-run |
Someone without car insurance strikes you and breaks your leg while you are trying to cross the street |
CT, DC, IL, KS, ME, MD, MA, MN, MO, NE, NJ, NY, NC, ND, OR, SC, SD, VT, WV and WI |
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Underinsured Motorist (UIM) |
Covers the difference if you are struck by a driver who doesn’t have enough insurance to cover your medical expenses or car repairs fully |
Your family racks up $100,000 worth of medical bills after a collision with a driver who only has $50,000 worth of bodily injury liability coverage |
CT, KS, ME, MD, MN, NE, NJ, ND, OR, SD and VT |
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Personal Injury Protection (PIP) |
Covers your medical bills, lost wages and funeral expenses after an accident, regardless of who was at fault |
You miss work for a month while you recover from a car accident you were responsible for |
DE, FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, OR, PA and UT |
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Medical Payments (Medpay) |
Pays your medical bills and funeral expenses if you are at fault for an accident but doesn’t cover lost wages |
An ambulance takes you to the emergency room after you speed through a red light and crash into another vehicle |
ME |
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Covers the difference if your car is totaled or stolen and the actual cash value (ACV) is less than what you owe on your auto loan |
Your car is worth $15,000 when it is stolen, but you still owe $20,000 to your lender |
No states |
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Covers the cost of renting a vehicle after an accident |
You need to rent a car to get to work while you wait for your car to be repaired after an accident |
No states |
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Covers tows, fuel delivery, flat tire replacements, battery jumpstarts, winching and lockout services |
You end up stranded on the side of the road after running over a nail that pops one of your tires |
No states |
What Happens if I Don’t Have Enough Car Insurance?
If you fail to adhere to your state’s car insurance requirements, you could face criminal punishments, such as getting your license suspended, paying fines and spending time in jail. In addition, without enough coverage, you could be largely on the hook for both your own expenses and another driver’s expenses after you cause an accident, potentially leading to costly and time-consuming legal battles, plus substantial debt.
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Preston Micalizio writes insurance content for SmartFinancial. He brings three years of professional experience writing in various industries, from higher education to e-commerce. He strives to engage with the audience, provide accurate reporting and make complex subjects easily digestible.
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