Getting the right coverage for your situation is one of the most important decisions you make as a driver. Too little coverage can leave you financially responsible after a serious at-fault accident, while too much coverage means you pay for more protection than your assets require. Our free tool calculates a personalized recommendation for how much car insurance you need.
How Much Car Insurance Do I Need in 2026?
Updated: August 13, 2026
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How Much Car Insurance Do You Need?
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What Are Liability Limits and How Much Do You Need?
To drive legally, you need at least your state's minimum liability coverage, but the right amount is enough to protect what you own. State minimums usually range from 25/50/25 to 50/100/50, which often isn't enough to cover a serious accident, leaving you to pay for the rest out of pocket. Add up your assets like home equity, retirement accounts, savings, and investments, subtract your debts, and buy enough coverage to protect that number from a lawsuit.
- Under $50,000 in assets: We recommend 50/100/50 if you can afford it.
- $50,000 to $500,000 in assets: Get at least 100/300/100. Those at the higher end should consider 250/500/250.
- $500,000 to $5,000,000 in assets: You need 250/500/250 or higher. Umbrella coverage is strongly recommended at this level to give you another $1M or more of coverage.
- $5,000,000 or more in assets: Work with an insurance broker on a customized umbrella and liability limits of 250/500/250 or more.
Liability insurance pays for damage you cause in a crash. Bodily injury liability covers medical bills for people you hurt, and property damage liability covers the car or property you hit. It doesn't pay for your own car. Limits come as three numbers, so a 100/300/100 policy means $100,000 per person for injuries, $300,000 per accident for injuries, and $100,000 for property damage.
MONEYGEEK EXPERT TIP: WHY STATE MINIMUM MAY NOT BE ENOUGH
“One common mistake drivers make is choosing state minimum coverage to save a few dollars per month. A driver with $180,000 in home equity causes an accident with $75,000 in injuries and $30,000 in property damage, a $105,000 total claim. With 25/50/25 minimums, insurance pays $50,000 and the driver owes $55,000 personally. A court can collect that from home equity, savings or future wages. State minimums were set years ago and haven't kept up with real costs. A minor accident with injuries can easily exceed what minimum coverage pays, leaving you personally liable for the difference.” - Mark Friedlander of the Insurance Information Institute
Do You Need Full Coverage?
Full coverage adds collision and comprehensive to your policy. Collision covers crashes with other vehicles or objects. Comprehensive covers theft, weather, vandalism and animal damage. Full coverage averages $134 a month against $63 for liability-only, and what you pay depends on where you live, what you drive and your driving record. In our analysis, 79% of drivers who shop at MoneyGeek choose full coverage.
- Your car is financed or leased. Your lender requires it for the life of the loan, and dropping it breaks your contract. Your lender then buys force-placed insurance and adds the cost to your balance. That coverage costs two to five times the market rate and protects only the lender.
- You can't afford to repair or replace your car out of pocket after an at-fault accident.
- Your car is newer or expensive to repair. New cars lose value fast and cost more to fix.
- You live somewhere with high theft rates, severe weather or flood risk.
- Your annual full coverage premium costs more than 10% of your car's value.
- Insurers measure your car's actual cash value (or market value minus depreciation) based on condition, mileage and recent sales. Look it up on Kelley Blue Book or Edmunds using private-party value, not trade-in value, which is lower. At the national average of $1,608 a year, calculate 10% for any car worth less than $16,080. If your car is worth $15,000 or more, keep full coverage, since a single total loss costs more than years of premiums.
If you drop full coverage: Switch to liability-only at or above your state's minimum rather than cutting coverage entirely. Liability-only averages $63 a month, saving $852 a year against full coverage. Most insurers let you add full coverage back within one to two business days, though some require a vehicle inspection first if the car sat uninsured for a while.
Deductibles: Pick a deductible you can afford to pay out of pocket. A $500 deductible costs you less at claim time but raises your monthly premium, and a $1,000 deductible does the opposite. If you have a clean record and rarely file claims, the savings from a $1,000 deductible pay for themselves in two to three years.
How Much Car Insurance You Need for Financed & Leased Cars
If you are financing or leasing your car, your lender sets the minimum coverage required. Most lenders require 100/300/100 liability limits, full coverage and a $500 deductible, but check your agreement. If your assets exceed those limits required by your lender, then you need a higher liability limit. Use your asset profile above to set the right limits for your situation, not just your lender's minimum.
Some lenders required gap insurance. It pays the difference between what you owe on your loan and what your car is worth if it is totaled. New cars lose value fast. In the first two to three years of a loan, you can easily owe more than the car is worth. If you total it during that window, your regular insurance only pays the car's current market value, leaving you on the hook for the rest. Buying gap coverage through your insurer costs less than buying it from the dealer.
Other Car Insurance Coverage You May Need
Depending on your state and your situation, you may need or want these car insurance coverages too.
Uninsured Motorist CoverageUninsured and underinsured (UM/UIM) coverage pays your medical bills, lost wages and pain and suffering damages if a driver with no insurance or not enough of it hits you. Get it whether or not your state requires it, since only 22 states and Washington, D.C., mandate the coverage. The Insurance Research Council found 15.4% of U.S. drivers uninsured as of 2023, and one in three is either uninsured or underinsured. In Mississippi and Michigan, one in four drivers have no coverage at all. Without UM/UIM, your only option is suing the other driver, and if they have no money you collect nothing. Match your limits to your liability limits. Most drivers pay $50 to $150 a year, or 5% to 10% more on a standard liability policy.
In states where UM/UIM is optional, insurers still have to offer it when you buy a policy. State requirements for uninsured and underinsured motorist coverage vary widely.
We recommend it for: All drivers who can afford it, even where it's not required.
Personal Injury Protection (PIP)PIP pays your medical bills and lost wages after an accident, no matter who caused it. Unlike liability insurance, it covers your costs, not the other driver's.
Required in: Delaware, Florida, Hawaii, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon and Utah.
We recommend it for: Drivers with no health insurance or a high-deductible plan. If your state doesn't require it, compare it with MedPay before adding it. PIP costs more but covers more.
MedPayMedPay pays your medical bills and your passengers' bills after an accident, regardless of fault. If your state requires PIP, you don't need MedPay. It does the same thing. Don't pick a $1,000 or $2,000 limit. One ER visit can cost more than that. Get at least $5,000.
Required in: Maine, New Hampshire and Pennsylvania.
We recommend it for: Drivers with a high-deductible health plan or no health insurance, in states where PIP is not required.
Rental Car DisbursementIf your car is stolen or damaged in a covered accident, rental car disbursement helps pay for a rental while yours is in the shop. It comes with a daily limit, often $30 to $50, and a cap on how many days it covers.
Rideshare InsuranceRideshare insurance covers you while you drive for Uber or Lyft, including the stretch when your app is on and you're waiting for a passenger. It costs a little more, and liability limits often reach $1 million while you're actively driving for the service.
Umbrella PolicyAn umbrella policy adds liability coverage above your auto and home limits. It pays when a lawsuit costs more than your regular policy covers. According to the Insurance Information Institute, it costs $200 to $350 per year for $1 million in coverage, depending on your location.
Required by: No states.
We recommend it for: Anyone with assets over $500,000, a home, or a teen driver.
Gap InsuranceGap insurance covers the difference between what your car is worth and what you still owe on it. After a total loss, your insurer pays actual cash value, not your loan payoff, so depreciation on a 60 or 72 month loan can leave you $5,000 to $10,000 short even with full coverage. Gap coverage pays that difference for $20 to $40 a year.
Required by: No states, though some lenders and leasing companies require it.
We recommend it for: Drivers in the first three years of a long loan on a new car.
Recommended Coverage: Summary & Next Steps
How much coverage you need depends on your situation and what you own. Buy enough that you won't be paying out of pocket after an accident. If you stick with state minimums like 25/50/25, meaning $25,000 per person for injuries, $50,000 per accident, and $25,000 for property damage, anything above those limits comes out of your own money.
Liability limits | 50/100/50 or state minimum if higher | 100/300/100 | 250/500/250 |
Full coverage (Collision & Comprehensive) | Yes with $1,000 deductible if car worth $5,000+. Required if financed or leased. | Yes, $1,000 deductible | Yes, $500 deductible |
Uninsured motorist | Match liability limits or state minimum | 100/300 | 250/500 |
Personal injury protection | 50/100/50 or state minimum if higher | $25,000 or state minimum if you have good health insurance | $50,000+ or state minimum with good health insurance |
Umbrella policy | No | No | Yes |
Est. monthly cost | $25–$125 | $100–$250 | $150–$250+ |
FAQ
For a new or expensive car, get full coverage with a $1,000 deductible and set your liability limits to match your assets, somewhere between 50/100/50 and 250/500/250. Add gap insurance if you're financing, and new car replacement coverage if the car is under two years old, which adds 5% to 10% to your premium but protects you from fast depreciation. For a luxury or classic car, agreed value coverage locks in the payout amount upfront instead of paying depreciated market value, though it costs 15% to 20% more.
Car insurance follows the car, not the driver. It covers anyone with permission to drive. Regular household drivers should be added as named drivers to avoid coverage gaps.
Most insurers allow four to five cars on a multi-car policy, along with two to four named drivers who live at the same address. Bundling that way saves 10% to 25% compared to separate policies. You can still customize each vehicle, so collision deductibles and extras like roadside assistance or rental reimbursement can differ from car to car.
Yes. You can change your deductible, add or drop coverage types, and adjust your liability limits any time during your policy period. Changes usually take effect right away or within a few days, and your insurer recalculates your premium from there. Bigger changes may need an underwriting review first.
Your personal auto policy does not cover you while the app is on. Add rideshare coverage to your personal policy. Some insurers will drop you if you drive for hire without telling them.
MoneyGeek's coverage recommendations are based on analysis of thousands of car insurance purchases across all driver profiles. Cost information is derived from over 52 million quotes across varying coverage levels, giving us a broad view of what drivers actually pay at each tier of protection. Mark Fitzpatrick, a licensed insurance producer, and Mark Friedlander, an insurance industry expert, bring direct experience working with thousands of customers to help people make a balanced cost versus protection decision.
See our full methodology.
About Mark Fitzpatrick
Mark Fitzpatrick, a licensed Property and Casualty (P&C) Insurance Producer in Connecticut, is MoneyGeek's resident expert in insurance and economics. He has spent nearly a decade covering the market, first at LendingTree and now at MoneyGeek, where he analyzes hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College before earning a master's in economics and international relations from Johns Hopkins University. Before MoneyGeek, he worked in financial risk management at State Street. He's also a five-time “Jeopardy!” champion.