How Much Car Insurance Do I Need? Expert Advice for 2026

The amount of car insurance you need depends on your specific situation. Answer these three core questions to figure out exactly how much coverage is right for you:

Liability coverage is legally required in every state. It pays for injuries and property damage you cause to others. Coverage is written as three numbers: $X per person / $Y per accident / $Z for property damage. Example: 100/300/100 means $100,000 per person, $300,000 total per accident, and $100,000 for property damage. See your state's minimum coverage car insurance requirements.

The right amount depends on your total assets (home value + savings + investments + car value). Here's how to determine what you need:

• Under $50,000 in assets → 50/100/50 or your state's minimum
• $50,000 to $500,000 in assets → 100/300/100
• $500,000+ in assets → 250/500/250

The higher your assets, the more car insurance liability coverage you need.

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 is required if you're financing or leasing, but optional if you own your car outright.

Deciding if you need full coverage:

• Car is financed or leased → Full coverage is required by your lender
• Car is worth $3,000+ → Full coverage makes financial sense
• Car is worth less than $3,000 → Skip it; the cost exceeds the benefit

If you skip full coverage and have an at-fault accident, you'll cover repairs out of pocket.

Your deductible is what you pay out of pocket after an accident before insurance kicks in. Choose a $500 deductible if you can afford the higher monthly policy cost  or a $1,000 deductible if you need lower monthly payments (saves about $17 a month on average). Only pick an amount you can actually afford to pay when you need it.

Beyond liability and full coverage, here is the car insurance you need based on your situation:

• Gap Insurance: Required by lenders if you're financing with less than 20 percent down or leasing. Covers the difference between what you owe and the car's actual value if totaled. Cost: $20 to $40 per year.
• Uninsured Motorist Coverage: Required in 22 states. Covers you if hit by an uninsured or underinsured driver. Recommended even where not required if you're concerned about uninsured drivers in your area.
• Personal Injury Protection (PIP): Required in some states. Covers your medical bills and lost wages after an accident regardless of fault. Most valuable if you have high health insurance deductibles or no health insurance.
• Umbrella Policy: Not required, but important if you have $500,000 or more in assets. This additional liability coverage kicks in when your auto policy maxes out. Example: Your auto covers $300k of a $500k lawsuit. Umbrella covers the remaining $200k, protecting you from wage garnishment and home liens. Cost: $150 to $300 per year for $1 million in coverage.
• Roadside Assistance: Optional. Covers towing, lockouts, and roadside help. Worth having if your car is prone to mechanical issues. Cost: $50 to $150 per year.
• Rental Reimbursement: Optional. Pays for a rental car while yours is being repaired. Worth having if you don't have a backup vehicle and need to drive regularly.

Each coverage serves a specific need. Choose based on your situation, not what others buy.

The decision framework above shows that financed/leased vehicles require full coverage (comprehensive and collision coverage) to protect the vehicle. Here's what else to know about how much car insurance you should have:

• Car insurance need before buying: Lenders and leasing companies require proof of coverage before you drive off the lot. A lapse of even one day triggers forced-place insurance at rates 2-3x higher than standard policies.
• Leasing vs. Financing: Leasing companies have stricter requirements than lenders. You will need higher liability limits (100/300/50 or higher), lower deductibles ($500 maximum), and you will often need gap insurance. The leasing company must be listed as loss payee on your policy.

After you have determined how much car insurance you need, you will need to choose from all coverage amounts and types. These are good, better, and best coverage examples of what drivers typically need based on how much they have to protect. They are a guideline to give you the full picture of the car insurance you need.

After you have determined how much car insurance you need, you will need to choose from all coverage amounts and types. These are good, better, and best coverage examples of what drivers typically need based on how much they have to protect. They are a guideline to give you the full picture of the car insurance you need.

You should choose based on your situation, not a checklist. If budget is tight, Good Coverage with higher deductibles protects your assets while keeping premiums manageable. If you want maximum peace of mind, Best Coverage plus an umbrella policy provides comprehensive protection. The right tier balances your assets, budget, and comfort level.

State minimums coverage needs haven't changed significantly in most states for 10 to 20 years. Meanwhile, the cost of cars and medical expenses has grown. Your state's minimum was designed for economics years ago. It can't protect you in 2026.

Here is why you need more car insurance than state minimums. As an example, let's say you cause an accident where you total a new $100,000 luxury vehicle and injure the other driver, who has up $60,000 in medical bills. Your 25/50/25 policy covers only $25,000 per person and $25,000 in property damage. You're personally liable for:

• $35,000 in additional medical costs ($60k actual expenses minus $25k covered)
• $75,000 in vehicle damage ($100k actual minus $25k covered)
• $10,000 to $50,000 in potential legal fees
• Total potential personal liability: $120,000 to $160,000

If you cause a serious accident, insufficient coverage leaves you personally liable for the gap. Creditors can garnish wages, place home liens, and force asset liquidation for 10 years. This is why you need liability car insurance that matches your assets and why higher liability limits protect you.

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