How Much Car Insurance Do I Need? Coverage Guide for 2026

Finding the right amount of car insurance coverage means balancing what protects your finances with what fits your budget. "Most drivers are underinsured," says Mark Friedlander, insurance expert at the iii.org. “You need enough to protect your assets, but not so much that premiums drain your budget.”

This guide helps you figure out the liability amounts and additional coverages that make sense for your situation and where you can skip optional coverages to save money.

The amount of car insurance you need to protect your assets depends on your specific situation and the total assets you want to protect with your car insurance. Answer these three core questions to determine the right amount of liability and other coverages you need.

Most drivers need 100/300/100 liability limits. This means $100,000 bodily injury per person, $300,000 per accident, and $100,000 property damage. Liability insurance pays for damage you cause in a crash. Bodily injury liability covers medical expenses for people you injure, while property damage liability covers repairs or replacement for the vehicle or property you hit. It doesn't pay for damage to your own car. The higher your assets, the more liability coverage you need. Here's how to determine how much liability insurance you need:

• Under $50,000 in assets → You need 50/100/50 or your state's minimum limits if budget is very tight
• $50,000 to $500,000 in assets → You need 100/300/100 liability limits
• $500,000+ in assets → You need 250/500/250 liability limits

If you are financing or leasing your car you will need as much liability car insurance required by the lender. Most lenders require approximately 100/300/100.

To drive your car legally, you need at least the minimum amount of liability car insurance required in your state. To protect your finances, you'll likely need more. See your state's minimum coverage car insurance requirements.

"State minimums were set years ago and haven't kept up with real costs. A minor accident with injuries can easily exceed what your minimum covers, leaving you personally liable," says Mark Friedlander, insurance expert at the iii.org.

The reason you need higher liability car insurance limits is to financially protect you in the case of an at-fault accident that has large medical and damage claims. For example, if you cause an accident with a $75,000 injury claim and $30,000 property damage claim, here's how it impacts you by coverage amount:

• With 25/50/25: Your insurance pays $50,000 total. You owe $55,000 personally.
• With 100/300/100: Your insurance pays $105,000 total. You owe $0 personally.

The difference of $30-$40 per month in insurance cost saves you from a $55,000 personal liability.

You'll need full coverage car insurance if you don't want to pay for repairs to your car when you have an at-fault accident. Full coverage protects your vehicle from damage. Collision covers accidents with other vehicles or objects. Comprehensive covers theft, weather, vandalism, or hitting an animal. Full coverage adds $50 to $100 monthly to your premium on average, depending on your location, car model and driving record.

When You Need Full Coverage: 

• If you're financing or leasing because lenders require both collision and comprehensive coverage
• A rule of thumb is to get full coverage only if the cost of the annual incremental coverage is less than 10% of your car's value.  For example, if adding full coverage will cost $500 per year, then only add it if your car is worth more than $5,000. Some agents also recommend dropping this coverage when your car is more than 10 years old. If you have an older car worth less than these rules of thumb, you can skip it and save money. Learn more about when to drop full coverage.
• An exception to the rule of thumb is when you can't afford to replace or repair your car out of pocket. In this case, it can make sense to keep full coverage.

You'll need to pick a deductible you can afford to pay out of pocket. A $500 deductible means you pay $500 toward repairs and your insurance covers the rest. A $1,000 deductible lowers your monthly premium but increases what you'll pay if you file a claim.

The table below summarizes the how much car insurance you need for minimum legal coverage, good coverage, and the best coverage. The difference in monthly cost between each tier is often smaller than you'd expect.  Minimum coverage costs between $25 and $75 on average depending on your location and driver profile.  Good coverage costs about $75 and $150 per month.  Best coverage costs between $150 and $250 more per month. Choose the good, better, or best coverage amounts that match your assets and budget:

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