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The minimum amount of car insurance necessary to meet your needs depends on several factors, including what state you live in, the value of your vehicle and how much insurance you can afford. There are many types of insurance you may need to protect yourself financially, but how much car insurance is recommended?

Key Takeaways

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You should carry the highest amount of liability coverage you can afford, with 100/300/100 being the best coverage level for most drivers.

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You may need to carry additional coverages to protect your vehicle, including comprehensive, collision and gap coverage.

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Each state has minimum insurance requirements, but most states require far less insurance than you need to protect yourself and your assets.

Liability Coverage vs. Car Value and Assets

When it comes to car insurance, there are two major types of coverage: liability, which covers damage you may do to someone else and their property, and everything else, which covers damage that happens to your property.

Liability coverage is a requirement in almost every state, with each state mandating its own minimum coverage levels. While choosing the minimum required levels of coverage is the cheapest option, it isn’t the smartest one. Some states have low liability minimums, with California and Pennsylvania requiring as little as $5,000 for property damage coverage.

Liability Coverage vs. Car Value and Assets

The smartest thing for drivers is to increase their liability levels as high as they can reasonably afford to go. If you are at fault in an accident and injure someone else or damage their property, you will be held liable for their expenses. Drivers without enough liability coverage to pay those costs will still be held responsible. The courts can seize your assets and garnish your wages to pay for damage you’ve caused, so having the highest possible liability coverage levels is the best way to protect yourself.

Is Car Insurance Required?

Liability insurance is a requirement in 49 out of 50 states. What states don’t require car insurance? New Hampshire is the only state that does not require insurance, but it does, however, require you to prove you can meet the New Hampshire minimum financial responsibility requirements in the event of an accident.

Each state has different laws regarding liability insurance requirements, with some requiring uninsured motorist coverage or personal injury protection, and others requiring only bodily injury and property damage liability. While the requirements are all different, they all have the same basic purpose: to prevent people from being financially harmed by someone else’s negligence on the road. It is important to stay up to date on your state’s laws and regulations to make sure you continue to meet their requirements.

How Much Car Insurance Coverage Do You Need?

How much car insurance do I need and how much car insurance is required are two very different questions. State requirements are often much lower than the amount necessary to protect you financially in the event of an accident.

The best liability coverage for most drivers is 100/300/100, which is $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability. You want to have full protection if you cause a significant amount of damage in an at-fault accident. You will also want the highest levels of personal injury protection (PIP) coverage, uninsured motorist coverage and other coverages required by law in your state. Remember, you will be held responsible for all damage you cause in an accident, so minimum liability coverage of 100/300/100 can protect your assets and future earnings.

Comprehensive and collision coverages aren’t requirements by law, but that doesn’t mean you don’t need them. If you have a loan on your vehicle, your lender may require comprehensive and collision coverage. Other coverages, like gap coverage or windshield coverage, may also be requirements by your lender to make sure you are protecting their investment.

These coverages are also a good idea if you can’t afford to replace your car if it is totaled or could not afford a major repair out-of-pocket. There are a lot of ways your car can be damaged, so making sure you have protection against any potential loss is a smart decision.

In the table below, you can see the coverage level costs for state-minimum liability-only coverage, state-minimum comprehensive and collision coverages with a $1,000 deductible and the 100/300/100 comprehensive and collision with a $1,000 deductible.

Coverage Level Costs by State
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Summary of Typical Car Insurance Coverage Types

  • Bodily Injury Liability: Liability insurance protects you by paying for another driver’s medical bills in an accident where you were at fault. Each state has its own minimum liability requirements, but it’s a good decision for you to have at least $100,000 per person and $300,000 per accident in bodily injury liability coverage.
  • Property Damage Liability: Liability insurance also pays for damage to another person’s property if you are at fault in an accident. Each state has its own minimum liability requirements, but you may want to have a minimum of $100,000 in property damage liability coverage.
  • Collision: Collision insurance pays for damages to your vehicle when you are at fault in an accident. If you have a loan on your car, your lender may require active collision insurance on your policy.
  • Comprehensive: Comprehensive insurance covers damage to your car that isn’t a result of an accident. Hail damage, theft and fire damage are just a few examples of what would be under this comprehensive insurance coverage.

What Coverage Amount Is Best and What Does 100/300/100 Mean?

It’s a good recommendation if you have coverage levels of 100/300/100, but what does that mean, exactly?

  • 100 — The first number in your liability coverage is the maximum amount your insurance company will pay for bodily injury claims for an individual person. In this instance, the 100 represents $100,000 in coverage.
  • 300 — The second number in your liability coverage is the maximum amount your insurance company will pay for bodily injury claims for a total accident. This does not supersede your per person maximum, however. So if you hit someone and they need $126,000 in medical care, you will be responsible for the extra $26,000 above your $100,000 per person limit, even though you have a per accident maximum of $300,000.
  • 100 — The third number in your liability coverage is the maximum amount your insurance company will pay for property damage claims in an at-fault accident. In this instance, the 100 represents $100,000 in coverage.

If you can’t afford a minimum of 100/300/100 in liability coverage, you might still want to choose the highest amount of coverage you can afford. If 50/100/50 is the highest you can go, you might want to choose that instead of defaulting to the state minimums. Conversely, if you can afford more than 100/300/100 and your insurance company offers it, you could take the higher levels of coverage. There are some expensive cars on the road, and the average personal injury settlement in a car accident is $52,900. Having higher levels of insurance is an important part of protecting yourself financially.

What States Require Additional PIP and UM Coverage?

Twenty-two states and the District of Columbia have uninsured motorist (UM) and/or underinsured motorist (UIM) coverage requirements. Those states are Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia, Wisconsin, and D.C. Although New Hampshire does not require auto liability insurance, drivers in this state need to show financial responsibility to cover accident expenses and purchasing insurance, which may include UM coverage.

Thirteen states require personal injury protection (PIP) coverage. Those states are Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Utah and Pennsylvania.

Will You Need Gap Insurance?

Gap insurance typically covers the difference between the value of your car and the balance of your car loan if your vehicle is totaled. This prevents you from having to make payments on a loan for a car you can’t drive and is often a requirement by lenders if you take out a loan to purchase a car.

What Other Coverages Are Offered?

There are many types of car insurance coverage available, including:

  • Umbrella Policy: If you don’t think that the highest levels of bodily injury and property damage liability would be enough to protect your assets in a severe accident, you might want to purchase an umbrella policy. Umbrella policies provide a minimum of $1,000,000 in liability coverage above and beyond your standard auto insurance liability limits.
  • Rental Reimbursement: Rental reimbursement pays for your rental car while your car is in the repair shop because of an insured loss.
  • Roadside Assistance: Roadside assistance covers the cost of tow trucks, locksmith services or basic repairs on the side of the road.
  • Non-Owner Insurance: If you don’t own a car, but you still drive occasionally, you might need a non-owner insurance plan to provide liability coverage in case of an accident.
  • Usage-Based/Pay-As-You-Drive Insurance: Your car insurance company can record your driving information, such as speed and mileage, and offer you discounts on your coverage for being a better driver. This may have unintended consequences, however, so it’s good to do your research before buying.
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A good minimum liability coverage level is 100/300/100. Keep in mind, many insurance companies offer much higher levels of coverage, with 250/500/250 as policy options by several insurance companies across the country.

What Deductible Should You Choose?

Your deductible is the amount you pay out-of-pocket towards claims for your vehicle. The good news is there is no deductible on your liability coverage, but for your comprehensive and collision policies, insurance companies will ask you to choose a deductible level.

Typically, you can choose anywhere from $100 to $1,000 as your deductible amount: the higher your deductible, the lower your monthly insurance premium. If you can set aside $1,000, in case you have to file a claim, it will help keep your insurance costs as low as possible.

Does It Ever Make Sense to Have Liability-Only Coverage?

There are some instances where only carrying liability coverage makes sense. If your car doesn’t have much in the way of cash value, it might not be worth it to carry comprehensive or collision coverage. Drivers who can afford to replace their car out-of-pocket may not want to spend the extra money on full coverage.

Commonly referred to as the 10% rule, if your annual cost for full coverage would be more than 10% of the vehicle’s actual cash value, you can (and probably a good move) drop your comprehensive and collision coverage.

Summary of Recommended Coverage

It’s a good recommendation for all drivers to carry a minimum of 100/300/100 in liability coverage. If you can’t afford to carry this much liability insurance, you might want to carry the highest level of liability coverage you can afford.

If you have a new car, luxury car or an expensive vehicle, you might want to carry collision and comprehensive coverage as well. If you have a loan on your vehicle, you can carry gap coverage as well.

Minimum Car Insurance Coverage Levels and Requirements by State

Each state has different rules and regulations regarding insurance requirements. Some states have much higher minimum coverage levels than others, and sometimes even require you to carry additional coverages such as personal injury protection (PIP) and uninsured motorist coverage (UM).

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About the Author


Rachael Brennan is a professional freelance writer. She has been published on a number of websites, including Adweek, Glamour, and Cracked. She has also worked in the insurance industry for more than a decade, earning her P&C license in all 50 states and her Life, Health, and AD&D license in New York and the surrounding states. You can follow her on Twitter @rachaelbwriter.

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