How Much Car Insurance Do I Need?

You need enough liability insurance to cover the full value of your assets. Your bodily injury liability coverage should be as much as your net worth, while your property damage liability insurance can be slightly lower since property damage claims are usually less expensive. Purchasing enough liability insurance to cover the value of your assets protects you from financial ruin if you cause a serious car accident.

When to Carry Only the Minimum Liability Coverage

Although almost every state requires drivers to carry liability insurance, the minimum coverage is not always enough to cover the cost of an accident. It's always best to carry as much liability coverage as you can afford, especially if you have a high net worth.

If you don't have many assets or think the risk is worth it, you might be comfortable with carrying only the minimum coverage. But no matter what, make sure you're carrying enough insurance to comply with state law and avoid paying fines for driving uninsured.

Liability Limits on Auto Insurance

Liability limits on auto insurance are the maximum amount that your insurance company will pay for injuries and property damage in accidents that you cause. Liability limits are typically written as three numbers divided by slashes.

For example, Arizona's liability coverage requirements are 50/30/10. That means drivers need to carry $50,000 in bodily injury liability coverage per person, $30,000 in bodily injury liability coverage per accident, and $10,000 in property damage liability coverage overall.

Your insurance company will never pay for anything beyond the limits of your policy. Using the Arizona example, if you cause an accident that leads to $70,000 in medical bills for the other driver, you will have to pay for $40,000 if you are only carrying the minimum insurance required. And if you can't afford to pay the full amount, the other driver can sue, and you can have your assets seized or wages garnished to cover the remainder.

You need at least the minimum amount of property damage liability coverage required in your state, for starters. But because many states have low minimum insurance requirements, it's advisable to get as much coverage as you can afford, and to purchase limits that are equal to your net worth at the very least. Property damage liability pays for damage to other people's property after you are at-fault in an accident, so you will be financially responsible for any expenses beyond your policy limits.

The average property damage liability claim is around $4,000, but it's best to consider a worst-case scenario when deciding on your coverage limits. For example, a new car costs nearly $36,000 on average. So if you total someone else's new car but are only carrying $4,000 in property damage coverage, you will be personally responsible for $32,000. The not-at-fault party can sue you for this sum, and in some states your wages can even be garnished.

Because of the risk posed by expensive accidents, you should also consider your assets when choosing policy limits. For instance, if your net worth is $100,000, it's recommended that you purchase $100,000 in property damage liability coverage. Otherwise, the other driver might be able to take your assets in a lawsuit. And if your net worth is particularly high, you can supplement these limits with an umbrella policy.

On the other hand, if your net worth is low, you are less likely to be sued for damages. In this case, it might be worth choosing lower coverage limits in return for lower premiums. However, purchasing higher limits is not that much more expensive than buying the minimum coverage, and the benefits can be well worth it down the road.

In California, drivers need $15,000 of bodily injury liability insurance per person, up to $30,000 per accident, and $5,000 of property damage liability insurance. California does not require uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and MedPay is optional in California. PIP is not available.

Here's How Much Car Insurance Drivers Need in California:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under California law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in California to make sure you're paying for the coverage you need.

In Texas, drivers need $30,000 of bodily injury liability insurance per person, up to$ 60,000 per accident, and $25,000 of property damage liability insurance. Texas does not require uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and PIP is required in Texas.

Here's How Much Car Insurance Drivers Need in Texas:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Texas law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Texas to make sure you're paying for the coverage you need.

In Florida, drivers need $10,000 of property damage liability insurance and $10,000 of personal injury protection. Florida does not require uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and PIP is required in Florida.

Here's How Much Car Insurance Drivers Need in Florida:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Florida law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Florida to make sure you're paying for the coverage you need.

In Pennsylvania, drivers need $15,000 of bodily injury liability insurance per person, up to $30,000 per accident, $5,000 in Medical Benefits, and $5,000 of property damage liability insurance. Pennsylvania does not require uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverages like MedPay, PIP or Medical Benefits pay for medical expenses for you and your passengers.

Here's How Much Car Insurance Drivers Need in Pennsylvania:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Pennsylvania law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Pennsylvania to make sure you're paying for the coverage you need.

In Illinois, drivers need $25,000 of bodily injury liability insurance per person, up to $50,000 per accident, and $20,000 of property damage liability insurance. Illinois requires uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and MedPay is optional in Illinois. PIP is not available.

Here's How Much Car Insurance Drivers Need in Illinois:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Illinois law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Illinois to make sure you're paying for the coverage you need.

In Ohio, drivers need $25,000 of bodily injury liability insurance per person, up to $50,000 per accident, and $25,000 of property damage liability insurance. Ohio does not require uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and both are optional in Ohio.

Here's How Much Car Insurance Drivers Need in Ohio:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Ohio law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Ohio to make sure you're paying for the coverage you need.

In North Carolina, drivers need $30,000 of bodily injury liability insurance per person, up to $60,000 per accident, and $25,000 of property damage liability insurance. North Carolina requires uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and MedPay is optional in North Carolina. PIP is not available.

Here's How Much Car Insurance Drivers Need in North Carolina:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under North Carolina law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in North Carolina to make sure you're paying for the coverage you need.

In South Dakota, drivers need $25,000 of bodily injury liability insurance per person, up to $50,000 per accident, and $25,000 of property damage liability insurance. South Dakota requires uninsured motorist protection, which replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits. Coverage like MedPay or personal injury protection pays for medical expenses for you and your passengers, and both are optional in South Dakota.

Here's How Much Car Insurance Drivers Need in South Dakota:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under South Dakota law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. You might also have to get gap insurance, which covers the difference between what you owe on your loan and what the vehicle is worth at the time of a total loss.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in South Dakota to make sure you're paying for the coverage you need.