You need enough car insurance to satisfy your state’s minimum coverage requirements and adequately protect your finances if you’re involved in an accident or your car is otherwise damaged. Drivers in nearly every state need at least a minimum amount of car insurance in order to drive legally. A similar financial investment is needed in the two states where insurance is not required: New Hampshire and Virginia. The exact amount of coverage you should buy depends on multiple factors, like your financial situation, the value of your vehicle, your driving habits, and where you live.
3 Steps to Determine How Much Car Insurance You Need:
- Find out your state’s minimum coverage requirements.
- Compare the cost of collision and comprehensive coverage to the cash value of your car. If the cost is greater than 10% of your car’s value minus your deducible, consider skipping it.
- Calculate how much liability insurance you need to cover the total value of your net worth.
How Much Liability Insurance Do I Need for My Car?
Liability insurance covers the other driver’s property damage or injuries if you cause an accident. It is the only car insurance coverage required in 31 states. In the remaining states, you are also required to carry other types of insurance such as uninsured/underinsured motorist coverage or personal injury protection (PIP).
Legally, you have what you need if you meet the state’s minimum requirements, but you probably need more coverage than that. If you cause an accident, insurance only pays up to your coverage limits. You have to pay for any damage in excess of those limits. And if the other driver sues, you could have assets seized or wages garnished to cover the remainder. As a result, you should have enough liability insurance to cover your assets.
Liability coverage is usually abbreviated as three numbers separated by slashes. For example, Texas requires 30/60/25—or up to $30,000 for one person’s injuries, $60,000 for all injured parties in an accident, and $25,000 for property damage.
Since bodily injury claims tend to be the most expensive, you’ll want to choose at least as much coverage as your net worth for the middle number in the description. If your total assets are worth $185,000, a 100/200/50 liability policy might be a good fit. Property damage is usually less expensive than injuries after an accident, so the third number will probably be the lowest.
What Other Car Insurance Coverage Do I Need?
Seventeen states expect drivers to carry other types of car insurance in addition to liability coverage, such as uninsured motorist coverage or personal injury protection. If you lease or finance your car, your lender can require that you carry collision and comprehensive insurance, too.
Personal Injury Protection (PIP)
PIP covers medical costs for you and your passengers after an accident. It is usually required in the 12 no-fault states, and you probably don’t need more than the legal minimum as long as you have health insurance to cover medical expenses.
Medical Expenses (MedPay)
MedPay works like PIP and can be used for a claim no matter who is at-fault for an accident, but it doesn’t cover lost wages and usually has lower policy limits than PIP. Again, you probably don’t need more than what’s required if you have healthcare.
Uninsured/Underinsured Motorist (UM/UIM)
Uninsured/underinsured motorist coverage can help if you’re hit by an uninsured driver, experience a hit-and-run, or collide with someone who doesn’t have enough coverage to pay for all the damage they caused. Since it’s pretty affordable and can really come in handy, it’s worth adding to your policy even if it’s not required by law in your state.
Car Insurance Requirements by State
| State | Bodily Injury Liability Coverage (per person) | Bodily Injury Liability Coverage (per accident) | Property Damage Liability | Other Requirements |
|---|---|---|---|---|
| Alabama | $25,000 | $50,000 | $25,000 | N/A |
| Alaska | $50,000 | $100,000 | $25,000 | N/A |
| Arizona | $25,000 | $50,000 | $15,000 | N/A |
| Arkansas | $25,000 | $50,000 | $25,000 | Personal Injury Protection: $5,000 |
| California | $15,000 | $30,000 | $5,000 | N/A |
| Colorado | $25,000 | $50,000 | $15,000 | N/A |
| Connecticut | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident |
| Delaware | $25,000 | $50,000 | $10,000 | Personal Injury Protection: $15,000 per person $30,000 per accident |
| Florida | $10,000 | $20,000 | $10,000 | Personal Injury Protection: $10,000 |
| Georgia | $25,000 | $50,000 | $25,000 | N/A |
| Hawaii | $20,000 | $40,000 | $10,000 | Personal Injury Protection: $10,000 |
| Idaho | $25,000 | $50,000 | $15,000 | N/A |
| Illinois | $25,000 | $50,000 | $20,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident |
| Indiana | $25,000 | $50,000 | $25,000 | N/A |
| Iowa | $20,000 | $40,000 | $15,000 | N/A |
| Kansas | $25,000 | $50,000 | $25,000 | Personal Injury Protection: $4,500 |
| Kentucky | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident Personal Injury Protection: $10,000 |
| Louisiana | $15,000 | $30,000 | $25,000 | N/A |
| Maine | $50,000 | $100,000 | $25,000 | Uninsured Motorist: $50,000 per person $100,000 per accident Personal Injury Protection: $2,000 MedPay: $2,000 |
| Maryland | $30,000 | $60,000 | $15,000 | Uninsured Motorist: $30,000 bodily injury per person $60,000 bodily injury per accident $15,000 property damage Personal Injury Protection: $2,500 |
| Massachusetts | $20,000 | $40,000 | $5,000 | Personal Injury Protection: $8,000 |
| Michigan | $20,000 | $40,000 | $10,000 | Personal Injury Protection: $50,000 |
| Minnesota | $30,000 | $60,000 | $10,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident Personal Injury Protection: $40,000 |
| Mississippi | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident |
| Missouri | $25,000 | $50,000 | $25,000 | N/A |
| Montana | $25,000 | $50,000 | $20,000 | N/A |
| Nebraska | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 |
| Nevada | $25,000 | $50,000 | $20,000 | N/A |
| New Hampshire | $25,000 | $50,000 | $25,000 | N/A |
| New Jersey | $15,000 | $30,000 | $5,000 | Uninsured Motorist: $15,000 bodily injury per person $30,000 bodily injury per accident $5,000 property damage Personal Injury Protection: $15,000 |
| New Mexico | $25,000 | $50,000 | $10,000 | N/A |
| North Carolina | $30,000 | $60,000 | $25,000 | Uninsured Motorist: $30,000 bodily injury per person $60,000 bodily injury per accident $25,000 property damage |
| North Dakota | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident Personal Injury Protection: $30,000 |
| Ohio | $25,000 | $50,000 | $25,000 | N/A |
| Oklahoma | $25,000 | $50,000 | $25,000 | N/A |
| Oregon | $25,000 | $50,000 | $20,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident Personal Injury Protection: $15,000 |
| Pennsylvania | $15,000 | $30,000 | $5,000 | Personal Injury Protection: $5,000 |
| Rhode Island | $25,000 | $50,000 | $25,000 | N/A |
| South Carolina | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident $25,000 property damage |
| South Dakota | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident $25,000 property damage |
| Tennessee | $25,000 | $50,000 | $15,000 | N/A |
| Texas | $30,000 | $60,000 | $25,000 | Personal Injury Protection: $2,500 |
| Utah | $25,000 | $65,000 | $15,000 | Personal Injury Protection: $3,000 |
| Vermont | $25,000 | $50,000 | $10,000 | Uninsured Motorist: $50,000 bodily injury per person $100,000 bodily injury per accident $10,000 max property damage |
| Virginia | $25,000 | $50,000 | $20,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident $20,000 property damage |
| Washington | $25,000 | $50,000 | $10,000 | N/A |
| West Virginia | $25,000 | $50,000 | $25,000 | Uninsured Motorist: $100,000 bodily injury per person $300,000 bodily injury per accident $50,000 property damage |
| Wisconsin | $25,000 | $50,000 | $10,000 | Uninsured Motorist: $25,000 bodily injury per person $50,000 bodily injury per accident MedPay: $1,000 |
| Wyoming | $25,000 | $50,000 | $20,000 | N/A |
What Optional Car Insurance Coverage Is Available?
Since liability insurance won’t pay for your property damage, you should also consider coverage that protects your vehicle. If you leased or financed your car, you may be required by the lender to get any or all of the following coverage types:
- Collision. Collision insurance covers damage to your vehicle after an accident. Like liability coverage, it has policy limits. Collision insurance also comes with a deductible, which is the amount you have to pay out of pocket before insurance pays the rest of the bill. You get to pick your deductible, but lower ones come with higher premiums.
- Comprehensive. If your car is damaged by something other than a collision, you’ll need comprehensive coverage for a claim. This includes damage caused by vandalism, theft, weather, and wildlife. Like collision insurance, you’ll have to choose a deductible.
- Guaranteed Auto/Asset Protection (GAP). Cars depreciate quickly, and you could easily end up owing more on your loan than the vehicle is worth if your car is totaled. Gap insurance bridges that gap and pays the difference if your car is a total loss.
What Happens If You Get Caught Driving Without Car Insurance?
Driving without minimum car insurance coverage is very risky. It could even have potentially life-changing consequences. If you’re pulled over and don’t have insurance, you could be hit with fines, license and registration suspensions, and costly insurance premium surcharges. If you’re uninsured or underinsured and get into an accident, you could end up paying thousands out of your own pocket to cover the costs of property damage and medical bills. And if you can’t pay, your wages could be garnished and your assets seized.
Even going with the bare minimum could be a risky choice, since you’ll still be held responsible if something disastrous happens. Remember, insurance only pays up to your coverage limits.