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Understanding minimum car insurance requirements

By Karen Schwartz Posted : 05/27/2014

Most states mandate that you carry automobile insurance and have laws outlining the minimum amount of liability coverage you must purchase.

However, those minimum amounts may not be enough, especially if you're in an accident. The cost of a car accident can be much more than the limits required by most states. The Insurance Information Institute recommends that you carry at least $100,000 of bodily injury protection per person and $300,000 per accident (known as 100/300).

Auto insurance minimums

State

Minimums

Alabama

25/50/25

Alaska

50/100/25

Arizona

15/30/10

Arkansas

25/50/25

California

15/30/5

Colorado

25/50/15

Connecticut

20/40/10

Delaware

15/30/10

District of Columbia

25/50/10

Florida

10/20/10

Georgia

25/50/25

Hawaii

20/40/10

Idaho

25/50/15

Illinois

20/40/15

Indiana

25/50/10

Iowa

20/40/15

Kansas

25/50/10

Kentucky

25/50/10

Louisiana

15/30/25

Maine

50/100/25

Maryland

30/60/15

Massachusetts

20/40/5

Michigan

20/40/10

Minnesota

30/60/10

Mississippi

25/50/25

Missouri

25/50/10

Montana

25/50/10

Nebraska

25/50/25

Nevada

15/30/10

New Hampshire

25/50/25

New Jersey

15/30/5

New Mexico

25/50/10

New York

25/50/10

North Carolina

30/60/25

North Dakota

25/50/25

Ohio

25/50/25

Oklahoma

25/50/25

Oregon 

25/50/20

Pennsylvania

15/30/5

Rhode Island

25/50/25

South Carolina

25/50/25

South Dakota

25/50/25

Tennessee

25/50/15

Texas

30/60/25

Utah 

25/65/15

Vermont

25/50/10

Virginia

25/50/20

Washington 

25/50/10

West Virginia 

20/40/10

Wisconsin

25/50/10

Wyoming

25/50/20

What do those three auto liability insurance numbers mean?

Perhaps you've wondered about the three numbers that are part of the auto liability insurance that you bought.

  1. The first number is the bodily injury liability maximum coverage for one individual who's injured in an auto accident.
  2. The second number is the maximum amount of bodily injury liability coverage per accident.
  3. The third number represents the maximum amount of property damage liability, and it's per vehicle.

For example, if you live in North Carolina, the numbers are 30/60/25, which means the minimum liability limits are $30,000 for injuries to one person, $60,000 for all injuries and $25,000 for property damage in one accident. In Wyoming, the figures are 25/50/20, which means that the minimum liability limits are $25,000 for injuries to one person, $50,000 for all injuries and $20,000 for property damage per vehicle in an accident. And if you reside in Michigan, the numbers are 20/40/10, meaning that the minimum liability limits are $20,000 for injuries to one person, $40,000 for all injuries and $10,000 for property damage per vehicle in an accident. (See: "5 misunderstood car insurance policy terms.")

The typical minimum amount of auto liability insurance coverage is 20/40/15, says Robert Passmore, senior director, personal lines policy, Property Casualty Insurers Association of America (PCIAA). States have held these numbers pretty stable over the years, says Passmore. "Most people carry more than the minimums," he notes.

Understanding auto insurance liability coverage across state lines

What happens if you hold the minimum amount of automobile insurance coverage required in your state and you're involved in an accident in another state that requires higher minimum coverage? Will your auto policy's coverage automatically increase to meet the other state's minimum coverage requirements?

For example, say you live in Ohio and hold the minimum amount of coverage, which is 25/50/25 (raised in December 2013). This means that the minimum liability limits in this state are $25,000 for injuries to one person, $50,000 for all injuries incurred and $25,000 for property damage for one vehicle in an accident.) What happens if you then travel to Maine for a vacation (where the limits are 50/100/25) and are involved in an accident that requires higher minimum coverage?

Fortunately, most policies would cover an accident in another state that requires higher minimum coverage, says Passmore. Your policy will typically automatically increase to meet that state's minimum coverage. It's important to read your policy to determine if that is true, he says.

"The advice I give to people about buying auto insurance is: Consider what you can afford and what you're trying to protect, and discuss this with your agent," Passmore says. "You might want to raise your deductible, and you can also shop around for coverage. It won't take you much time, and it really pays off." (See: " 5 ways to compare car insurance companies.")

What's the definition of no-fault car insurance?

A dozen states -- including Florida, New Jersey, Kansas, New York, Minnesota and Michigan – have no-fault automobile liability insurance laws. No-fault car insurance limits your ability to sue the other driver in the event of an accident, says Passmore. If your state has a no-fault auto insurance law, your policy must pay medical bills for you and your passengers regardless of who caused the accident.

True no-fault states require drivers to purchase minimum levels of personal injury protection (PIP) coverage. The amount of coverage required varies by state, as does the nature of the coverage.  Depending on the state, PIP coverage may reimburse the policyholder for medical and other accident-related expenses as well as lost wages. (See: "Learn about no-fault auto insurance.")

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1 Responses to "Understanding minimum car insurance requirements"
  1. Drew Mack 30, Jan, 2013

    No fault insurance laws, as well as other outrageous laws (like the new one that says you have to pay an extra $10 per month for law enforcement fees), are some of the reasons why New York has the highest insurance rates in the country. Yeah, our 25/50/10 minimums are on par with the rest of the country, but if you take a look at at we really have to pay, it's much more/

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