How Much Car Insurance Do I Need? Recommended Coverage for You

MoneyGeek and the Insurance Information Institute recommend the following for how much car insurance is enough: 

• At least meet minimum state auto insurance requirements (explained below), but these minimums only make sense when you can't afford higher cost insurance, have a low value car, and have minimal assets. Most states require 25/50/25 coverage ($25,000 per person for bodily injury, $50,000 per accident, $25,000 for property damage).
• Protect your assets with higher liability coverage, comprehensive and collision (full coverage) and optional coverage add-ons. Most drivers should choose 100/300/100 liability coverage to guard against lawsuits that could target your home, savings, and future earnings.
• Depending on where you live, you may also need uninsured motorist coverage, personal injury protection (PIP) or medical payments coverage. Thirteen states require PIP coverage, while 22 states mandate uninsured/underinsured motorist protection. See your state's requirements in the table below.
• Meet lender car insurance requirements if you finance or lease. Leasing will require comprehensive and collision coverage and higher liability limits, typically 100/300/50 or higher.

Nearly every state in the U.S. requires minimum liability coverage. Thirteen states require personal injury protection (PIP) to cover medical expenses. Twenty-two states require uninsured/underinsured motorist coverage that protects you when another driver has no insurance or insufficient coverage. The table below shows state minimum requirements across all 50 states plus Washington D.C.

Although state minimums are less expensive, we strongly recommend higher liability coverage because medical costs and vehicle values have increased faster than the minimum requirements, which have remained unchanged in most states for 10-20 years.

Real-world example: You have a minimum 25/50/25 auto liability coverage and cause an accident that totals a new Range Rover Sport ($100,000 value) and results in $50,000 of medical expenses for the other driver. Your insurance would only cover $25,000 of the vehicle damage and $25,000 of medical costs, leaving you personally responsible for the remaining $75,000 for the vehicle and $25,000 in medical expenses—a total of $100,000 out-of-pocket.

You could be sued for this amount plus potential additional damages for pain and suffering or lost wages. Attorney fees for defending the lawsuit could range from $10,000 to $50,000. This is why higher liability limits provide important protection for your personal assets, including your home equity, savings accounts, and future wages (which can be garnished for up to 10 years in some states).

100/300/100 coverage provides good protection for most households. This liability amount costs around $1,200 annually on average when combined with full coverage or about $600 for a liability-only policy, but provides four to ten times more protection than state minimums. Those with high assets (net worth over $500,000) should consider 250/500/250.

Most drivers pay $1,000-$1,500 annually for 100/300/100 coverage. Higher limits cost $200-$400 more annually but protect you from devastating out-of-pocket expenses if you cause a serious accident. For context, increasing from 50/100/50 to 100/300/100 typically adds just $15-$30 monthly—less than most people spend on streaming services.
Determining your liability coverage is the first decision when choosing how much car insurance you need. Factors that should drive your decision for how much liability coverage you need.

• Asset protection: Choose limits high enough to protect your home equity, savings, investment accounts, and retirement funds. A good rule of thumb is to have liability coverage equal to your net worth, or at a minimum, 100/300/100 for households with assets exceeding $50,000.
• Financial situation: Higher income and more assets require higher limits. High earners face garnishment risk for future wages—judgments can attach to your income for up to 10 years depending on state law.
• Risk exposure: Consider how much you drive annually and your accident risk. Commuters driving over 15,000 miles per year face higher exposure than occasional drivers covering 5,000 miles.
• Vehicle type: Expensive or heavy vehicles that could cause significant damage warrant higher limits. A large SUV or pickup truck can cause more property damage than a compact sedan, increasing your liability exposure.

If your car is financed or leased, you must carry full coverage since it's a lender requirement. For vehicles you own outright, the decision comes down to your car's value and risk tolerance.

We recommend that most drivers add collision and comprehensive coverage, especially if they are in states where weather damage or theft are common issues. This protects your vehicle from accidents and damage. If you drive a vehicle worth less than $3,000 and have the money to replace it after a bad accident, you can consider dropping this coverage. For help deciding, use our car insurance calculator to compare costs and review the full coverage protection levels below:

• Collision coverage pays to repair your car after an accident, regardless of who's at fault. This protects you when you cause an accident, when the other driver is uninsured, or when you hit a stationary object like a guardrail or tree.
• Comprehensive coverage protects against theft, vandalism, weather damage (hail, flooding, hurricanes), fire, falling objects, and animal strikes. In 2024, the average comprehensive claim was $4,450, with theft claims averaging $10,000+ and hail damage often exceeding $5,000.

Skip full coverage if your car is worth less than $3,000 or if annual premiums exceed 10% of your vehicle's value. At that point, you're paying too much relative to potential payouts.

Full coverage makes sense for newer vehicles (less than 10 years old) or those worth more than $4,000. It's especially smart if you live in areas with high theft rates, severe weather, or frequent deer collisions, or if you can't afford $5,000-$15,000 in unexpected repair costs. Check your area's risk factors: Coastal regions face risks from hurricanes and flooding, while rural areas experience higher rates of animal collisions.

When you finance or lease a vehicle, the lender typically requires certain coverages to protect their financial interest in the vehicle. They will ask for proof of coverage before you drive off the lot, and you'll need to maintain continuous coverage throughout the loan or lease term. Letting coverage lapse can trigger forced-place insurance from the lender at rates 2-3 times higher than standard policies.

You should choose a $500 or $1,000 deductible. If you choose the higher amount, you'll save $100-$200 per year, but make sure you have an emergency fund to pay it in the case of an at-fault accident. Never choose a deductible higher than you can afford to pay in cash—doing so means you can't afford to actually use your insurance when you need it most.

• Applies separately to comprehensive and collision claims—if your car is damaged in a hailstorm (comprehensive) and then in an accident (collision) the same month, you'll pay two separate deductibles.
• Paid each time you file a claim—multiple claims in a year mean multiple deductible payments.
• Higher deductibles mean lower premiums but more out-of-pocket costs when you make a claim. Increasing your deductible from $500 to $1,000 typically saves $100-$200 annually, but costs you an extra $500 when filing a claim.
• Common deductible amounts: $250, $500, $1,000, and $2,500. Most drivers choose $500 or $1,000 as the sweet spot between affordable premiums and manageable out-of-pocket costs.

Choosing the right amount of car insurance protects your finances without overpaying for coverage you don't need. Most drivers should carry 100/300/100 liability coverage plus comprehensive and collision with a $500-$1,000 deductible—this combination typically costs $1,200-$1,800 annually but provides four to ten times more protection than state minimums.

State minimum requirements rarely offer adequate protection since they haven't changed in 15-20 years while medical costs and vehicle values have increased 40-60%. A single serious accident can wipe out your savings and trigger wage garnishment for up to 10 years if you're underinsured. Budget-conscious drivers with minimal assets (under $50,000) and older vehicles (worth less than $3,000) can consider 50/100/50 coverage, while high-net-worth individuals should opt for 250/500/250 plus an umbrella policy.

Choosing the right car insurance can be overwhelming. Here are answers to common questions to help you decide how much coverage you need.

Study Overview

MoneyGeek determined car insurance costs using quotes from various locations with a sample driver profile. We analyzed state liability coverage limits, average costs and policy coverage types.

Data Sources and Depth

We sourced data from Quadrant Information Services and state insurance departments. Our analysis includes over 500,000 quotes across 46 providers and 473 ZIP codes.

On This Page
This pages cites coverage add-on costs and average costs ranges for liability coverage.  Add-on cost came directly from insurance company online quotes.  Liability policy cost ranges were averaged from our data base of quotes with the driver profile below.

Driver Profile

To estimate average annual auto insurance rates, we used this sample driver:

• 40-year-old male
• Toyota Camry LE
• Clean driving record
• 12,000 miles driven annually