How Much Car Insurance Do I Need?

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

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

How Much Car Insurance Do You Actually Need?

Dylan Tate

Dan Marticio

On This Page

How Much Car Insurance Do I Really Need?

Teen Drivers

Senior Drivers

Is Car Insurance Required?

How Much Car Insurance Do I Need Where I Live?

How Do I Choose the Right Amount of Car Insurance?

What Types of Car Insurance Are There?

What Happens if I Don’t Have Enough Car Insurance?

FAQs

Is minimum car insurance enough?

Should I choose a high or low deductible?

Do I need gap insurance?

Sources

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