How Much Car Insurance Do You Actually Need?

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Car insurance is required by law in almost every state, meaning you will need to maintain at least the minimum amount of coverage demanded 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.

Key Takeaways

  • Every state has car insurance coverage requirements, although states like New Hampshire and Virginia allow exceptions to these requirements.
  • State-mandated minimum liability insurance requirements are generally fairly low, so you may want to opt for a policy with 100/300/100 coverage limits.
  • You should take into account your net worth, age, car value, location, driving habits, income and other personal factors when deciding how much auto insurance you need.
  • Full coverage is a good starting point for most drivers since it typically includes all of the coverage types that would be required by your lender and state government.

How Much Car Insurance Do I Really Need?

A general rule of thumb recommended by insurance professionals is that you buy a 100/300/100 liability insurance policy. This means your policy should include $100,000 worth of bodily injury liability coverage per person injured in an accident, $300,000 worth of bodily injury liability coverage to split among all of the people injured in a single accident and $100,000 worth of 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 in order to secure extra liability coverage in increments of $1 million.

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] Keep in mind that your premiums will likely increase substantially when you add a teenager to your policy because they are among the riskiest types of drivers to insure.

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]

Is Car Insurance Required?

Drivers are required to have auto insurance in the District of Columbia and the vast majority of states. The main exceptions are New Hampshire, where drivers can forego coverage if they have enough money to meet the state’s financial responsibility requirements, and Virginia, where drivers must pay a $500 uninsured motor vehicle (UMV) fee every time they renew their registration to go without coverage.[4][5]

In addition, South Carolina drivers are currently allowed to drive without car insurance if they pay a $550 fee but this will no longer be an option after July 1, 2024.[6] All three of these states also require drivers who do opt to purchase auto insurance to maintain a minimum amount of coverage.

How Much Car Insurance Do I Need Where I Live?

The below table goes over the minimum coverage types and coverage limits you are legally required to purchase depending on the state you live in.[7]

State/District

Minimum Liability Requirements

Other Minimum Requirements

Alabama

25/50/25

N/A

Alaska

50/100/25

N/A

Arizona

25/50/15

N/A

Arkansas

25/50/25

N/A

California

15/30/5 for standard policies or 10/20/3 through the California Low Cost Automobile Insurance Program

N/A

Colorado

25/50/15

N/A

Connecticut

25/50/25

25/50 UM/UIM

Delaware

25/50/10

15/30 PIP

District of Columbia

25/50/10

25/50/5 UM

Florida

$10,000 PD

$10,000 PIP

Georgia

25/50/25

N/A

Hawaii

20/40/10

$10,000 per person PIP

Idaho

25/50/15

N/A

Illinois

25/50/20

25/50 UM (UIM required only on policies that exceed minimum limits)

Indiana

25/50/25

UM/UIM coverage is automatically included but may be rejected in writing

Iowa

20/40/15

N/A

Kansas

25/50/25

25/50 UM/UIM and the following PIP requirements:

  • $4,500 per person for medical expenses
  • $900 a month for one year to cover lost income (for the injured person or survivors if the injured person dies)
  • $25 a day for in-home services (for the injured person or survivors if the injured person dies)
  • $2,000 for funeral expenses
  • $4,500 for rehabilitation expenses

Kentucky

25/50/25 or $60,000 single limit policy

$10,000 per person PIP

Louisiana

15/30/25

N/A

Maine

50/100/25 or $125,000 single limit policy

50/100 UM/UIM and $2,000 per person Medpay

Maryland

30/60/15

30/60/15 UM/UIM (PIP required only on policies that exceed minimum limits)

Massachusetts

20/40/5

20/40 UM and $8,000 per person PIP

Michigan

20/40/10

$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)

Minnesota

30/60/10

25/50 UM/UIM and $40,000 per person PIP ($20,000 for medical expenses and $20,000 for non-medical expenses)

Mississippi

25/50/25

N/A

Missouri

25/50/25

25/50 UM

Montana

25/50/20

N/A

Nebraska

25/50/25

25/50 UM/UIM

Nevada

25/50/20

N/A

New Hampshire

Financial responsibility or 25/50/25

Financial responsibility or 25/50 UM/UIM and $1,000 Medpay

New Jersey

25/50/25 for standard policies or $5,000 PD for basic policies

25/50 UM/UIM and $15,000 per person PIP for standard policies or $15,000 per person PIP for basic policies

New Mexico

25/50/10

N/A

New York

25/50/10 (plus 50/100 for wrongful death)

25/50 UM and $50,000 per person PIP (plus a $2,000 death benefit)

North Carolina

30/60/25

30/60/25 UM (UIM required only on policies that exceed minimum limits)

North Dakota

25/50/25

25/50 UM/UIM and $30,000 per person PIP

Ohio

25/50/25

N/A

Oklahoma

25/50/25

N/A

Oregon

25/50/20

25/50 UM/UIM and $15,000 per person PIP

Pennsylvania

15/30/5 or $35,000 single limit policy

$5,000 PIP (also known as first-party medical benefits)

Rhode Island

25/50/25

UM/UIM required only on policies that exceed minimum limits

South Carolina

25/50/25

25/20/25 UM

South Dakota

25/50/25

25/50 UM/UIM

Tennessee

25/50/25

N/A

Texas

30/60/25

N/A

Utah

25/65/15

$3,000 PIP

Vermont

25/50/10 or $115,000 in self-insurance

50/100/10 UM/UIM

Virginia

UMV fee or 30/60/20

UM/UIM coverage is automatically included but may be rejected in writing

Washington

25/50/10

N/A

West Virginia

25/50/25

25/50/25 UM

Wisconsin

25/50/10

25/50 UM

Wyoming

25/50/20

N/A

state car insurance requirements

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 $48,759 on average as of December 2023, so you could end up underinsured if you don’t have at least $50,000 worth of property damage liability insurance.[8] At the same time, it’s important to pay attention to your budget to make sure you aren’t overpaying for coverage you can afford to go without.

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 are often required by lenders. You could also consider adding other optional coverage types depending on your specific coverage needs.

What Types of Car Insurance Are There?

See the below table for an overview of the major types of car insurance that you will be required to purchase or may have the option to add to your auto insurance policy.

Coverage

Description

Example

Required?

Bodily Injury Liability

If you were the at-fault driver, 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, NH and VA

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 and VA

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

Comprehensive

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

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

Underinsured Motorist (UIM)

Covers the difference if you are struck by a driver who doesn’t have enough insurance to fully cover your medical expenses or car repairs

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, SD and VT

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

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

Gap

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

Rental Car Reimbursement

Covers the cost of renting a vehicle after an accident you weren’t responsible for

You need to rent a car to get to work while you wait for your car to be repaired after an accident

No states

Roadside Assistance

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.

Ready To Shop for Auto Insurance?

FAQs

Is minimum car insurance enough?

No, insurance experts commonly recommend buying a 100/300/100 liability insurance policy, which is far more coverage than any state requires.[1][7] You may also want to buy uninsured motorist coverage with the same coverage limits as your liability car insurance.

Should I choose a high or low deductible?

You should choose a high deductible if you have plenty of money saved up and would like to lower your auto insurance premiums. Conversely, you should choose a low deductible if you find it easier to budget for slightly higher payments every month rather than a large amount of money at one time in the event that you need to file a car insurance claim.

Do I need gap insurance?

Gap insurance is not required by law and you will likely only need it if you made a small down payment on your car or are financing it over an extended period of time.

Sources

  1. Oklahoma Insurance Department. “Auto Insurance: Common Myths,” Page 2. Accessed Jan. 23, 2024.
  2. Centers for Disease Control and Prevention. “Teen Drivers and Passengers: Get the Facts | Transportation Safety | Injury Center.” Accessed Jan. 23, 2024.
  3. Insurance Information Institute. “Nine Ways To Lower Your Auto Insurance Costs.” Accessed Jan. 23, 2024.
  4. New Hampshire Insurance Department. “2022 Automobile Insurance Consumer Frequently Asked Questions,” Page 5. Accessed Jan. 23, 2024.
  5. Virginia Department of Motor Vehicles. “Insurance Requirements.” Accessed Jan. 23, 2024.
  6. South Carolina Legislature Online. “Code of Laws - Title 56 - Chapter 10 - Motor Vehicle Registration and Financial Security.” Accessed Jan. 23, 2024.
  7. Minimum limits were obtained from individual state Departments of Insurance, Motor Vehicles, etc.
  8. Kelley Blue Book B2B. “New-Vehicle Prices Down Record 2.4% Year Over Year.” Accessed Jan. 23, 2024.

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