You know you need car insurance. It's the law in nearly every state, and the risk of paying out of pocket in a serious accident isn't worth taking.
But how much car insurance do you need? The right answer depends on your individual circumstances and the vehicle and other assets you are trying to protect.
Read on for help figuring out how much coverage you should buy and information about your options when buying car insurance.
How much car insurance should I get?
One of the most challenging aspects of buying car insurance is determining how much you need. Nobody wants to pay for more coverage than necessary. On the other hand, if you purchase too little coverage, you could leave yourself financially vulnerable.
Almost all states require you to purchase at least a minimum level of car insurance in the form of liability coverage. But the minimum amount you must purchase by law varies from state to state. You should check with your insurer or state insurance department to make sure you have enough coverage to drive legally.
How much car insurance is required in your state?
In addition to state minimums, states often have other car insurance requirements.
To help you get a better sense of what you need, CarInsurance.com – which, like Insurance.com, is published by QuinStreet – gathered car insurance premium data from every state so you could see your state’s minimum requirement as well as your state’s average car insurance rate.
However, for many – if not most – drivers, carrying the minimum required level of insurance is inadequate. If you are at fault in a serious accident – particularly one that hurts or even kills someone – you could be responsible for hundreds of thousands of dollars or more in damages.
“If the limits you carry are insufficient to cover the damages, you could be held personally responsible for the difference,” says Rick Kautzer, associate director of personal lines product management for Dairyland, a Stevens Point, Wisconsin-based insurer.
For many people, such a scenario would be disastrous.
The table below shows what the average driver pays for liability coverage in each state, and how much more he or she would pay to boost their coverage.
| State | State minimum liability only | 50/100/50 liability only | $ increase | % increase |
|---|---|---|---|---|
| New Jersey | $989 | $1,120 | $131 | 13% |
| Florida | $908 | $1,586 | $678 | 75% |
| New York | $875 | $960 | $85 | 10% |
| Delaware | $821 | $999 | $178 | 22% |
| Connecticut | $773 | $849 | $76 | 10% |
| Louisiana | $726 | $1,260 | $534 | 74% |
| Kentucky | $717 | $927 | $210 | 29% |
| Michigan | $711 | $755 | $44 | 6% |
| Nevada | $683 | $1,009 | $326 | 48% |
| Rhode Island | $648 | $782 | $134 | 21% |
| South Carolina | $628 | $793 | $165 | 26% |
| Maryland | $607 | $648 | $41 | 7% |
| California | $582 | $864 | $282 | 48% |
| Washington D.C. | $577 | $663 | $86 | 15% |
| Georgia | $567 | $736 | $169 | 30% |
| Oregon | $551 | $594 | $43 | 8% |
| Utah | $526 | $645 | $119 | 23% |
| Missouri | $525 | $586 | $61 | 12% |
| Massachusetts | $523 | $660 | $137 | 26% |
| Texas | $520 | $659 | $139 | 27% |
| Washington | $505 | $664 | $159 | 31% |
| Arizona | $494 | $697 | $203 | 41% |
| Illinois | $484 | $530 | $46 | 10% |
| Minnesota | $479 | $511 | $32 | 7% |
| West Virginia | $474 | $530 | $56 | 12% |
| Virginia | $469 | $489 | $20 | 4% |
| Colorado | $467 | $726 | $259 | 55% |
| Mississippi | $434 | $583 | $149 | 34% |
| Arkansas | $422 | $510 | $88 | 21% |
| Alabama | $420 | $585 | $165 | 39% |
| New Hampshire | $411 | $441 | $30 | 7% |
| Pennsylvania | $398 | $501 | $103 | 26% |
| North Carolina | $396 | $435 | $39 | 10% |
| Montana | $389 | $525 | $136 | 35% |
| Kansas | $389 | $412 | $23 | 6% |
| Hawaii | $389 | $519 | $130 | 33% |
| Indiana | $384 | $442 | $58 | 15% |
| New Mexico | $376 | $546 | $170 | 45% |
| Wisconsin | $375 | $419 | $44 | 12% |
| Tennessee | $368 | $445 | $77 | 21% |
| Oklahoma | $352 | $545 | $193 | 55% |
| Nebraska | $350 | $383 | $33 | 9% |
| North Dakota | $340 | $353 | $13 | 4% |
| Alaska | $336 | $414 | $78 | 23% |
| Maine | $330 | $335 | $5 | 2% |
| Idaho | $326 | $386 | $60 | 18% |
| Ohio | $308 | $365 | $57 | 19% |
| Vermont | $306 | $334 | $28 | 9% |
| Wyoming | $293 | $331 | $38 | 13% |
| South Dakota | $267 | $289 | $22 | 8% |
| Iowa | $263 | $318 | $55 | 21% |
Recommended auto insurance coverage by experts
Experts generally recommend purchasing enough car insurance to make sure you are financially protected in the event of an accident.
This typically means purchasing more insurance than the minimum amount of liability coverage your state requires you to carry. The more assets you have at risk, the more important it is to purchase robust coverage.
In the end, experts typically say it’s better to err on the side of caution and get more coverage rather than less.
“If you’re involved in an accident, you’ll rarely regret having a little too much coverage,” Kautzer says. “But you may regret having too little.”
As a general rule, you will need to think about three major aspects of your insurance coverage:
How much liability insurance do you need?
Carrying the minimum amount of liability insurance required by your state can leave you with minimal coverage. It usually makes sense to purchase liability insurance above the minimum required threshold.
People who have a lot of assets to protect might even want to purchase another $1 million or $2 million – or more – in coverage through an umbrella insurance policy.
Do you need comprehensive and collision coverage?
Remember, liability insurance only covers the damages you cause to someone else and their property. To protect your vehicle, you need to purchase comprehensive and collision coverage.
Some drivers may skip this coverage, particularly if their vehicle is older or has a lot of miles on it. However, if you have a car loan, your lender might require you to purchase both comprehensive and collision coverage.
What type of deductible are you comfortable paying?
One of the best ways to save on auto insurance is to raise your deductible. For example, raising your deductible from $250 to $1,000 might reduce your premium costs significantly.
Before making this decision, it is important to gauge whether you would be comfortable paying the deductible amount before your insurance coverage kicks in.
Basic, better and best auto coverage
Another way to figure out how much coverage you need is to get a sense of your basic insurance requirements and then how you can improve on it.
Basic coverage
This is the minimum amount of coverage your state requires.
The disadvantage of minimum coverage is that the amount might not leave you with enough coverage to pay for damages you cause to someone else or their property, Kautzer says.
“That minimum amount is often insufficient to protect you against damages you may cause in an accident,” he says. “For example, the value of a mid-level vehicle that is several years old could exceed the minimum amount of coverage the state requires.”
Better coverage
“Better coverage” might include purchasing optional auto insurance coverage – such as collision and comprehensive insurance – that reimburses you for damages to your vehicle.
This goes beyond the minimum and offers better financial protection for damages you cause to other people or their property.
Top-level coverage
This is purchasing enough coverage to protect you even in the worst-case scenario, such as if you badly injure or kill someone in an accident.
Not only would you carry large amounts of liability coverage in your auto policy, but you might go the extra mile and purchase $1 million or more in extra coverage.
Types of car insurance coverage
As mentioned above, there are several different types of auto insurance coverage, which are explained in more detail below:
Liability insurance
Liability insurance arguably is the most important part of your car insurance policy. It covers damages that you cause to someone else or their property.
“Virtually all states set a minimum level of coverage you are required to carry on your auto insurance policy,” Kautzer says.
The more liability coverage you want, the higher the cost of insurance. But that higher price tag can be a bargain if you are sued and are responsible for paying damages after a major accident.
Collision and comprehensive insurance
Collision insurance covers damages to your vehicle that occur after a collision with another car or object, or after you flip your vehicle.
Comprehensive covers damages to your car from incidents other than those caused by collisions, such as hail damage, animal strikes or vandalism. It also reimburses you if the vehicle is stolen.
These types of coverage are optional, although your lender may require you to carry them if you have taken out an auto loan to pay for the car.
Personal injury protection and medical payments coverage
A dozen states have no-fault insurance laws. In these places, you must file a claim with your insurance company after an accident, regardless of who was at fault.
Drivers in these states must purchase a minimum level of personal injury protection (PIP) insurance. This type of coverage pays medical expenses – and in some cases, lost wages – regardless of who is at fault for the damages.
Medical payments coverage is an optional form of insurance in most states, according to Geico. It covers the cost of medical care if you or your passengers are injured in an accident.
Uninsured/ underinsured motorist insurance
Many drivers are underinsured or carry no insurance at all, according to the Insurance Information Institute. Uninsured/underinsured insurance covers damages you incur when the driver responsible for the accident does not carry adequate levels of car insurance.
Some states require you to carry uninsured/underinsured motorist coverage. But in other states, the coverage is optional.
Optional car insurance coverage types
In addition to the standard forms of car insurance, there are several additional types of optional coverage that your auto insurer may offer. They include:
Gap insurance
Whenever you buy or lease a new car, its value plunges almost immediately. Most new car owners are aware of this unhappy reality.
However, they might not fully understand that this rapid depreciation can leave a gap between what they owe on their loan and the amount of money they would receive from their insurer in the event of a claim.
Gap insurance covers the difference between what you owe on your car and its actual cash value if it is damaged or totaled. It’s optional coverage, but you should consider it if you’ve leased or financed your vehicle.
Rental car insurance
Many – although not all – car insurance companies extend your personal auto insurance coverage to most rental cars that you drive. If this is the case, you do not need rental insurance.
Roadside assistance
Roadside assistance coverage reimburses you if your car breaks down and you need services such as mechanical assistance, fuel delivery or towing.
Non-owner insurance
Some people who do not own a car nevertheless still need car insurance for the times they do drive.
This type of policy makes sense if you frequently rent cars or drive cars owned by other people, particularly if you are unsure of how much coverage they carry. It covers you for damages you cause to others and their property, but not for damages to the car you are driving.
Usage based insurance
Usage-based coverage is often known as “pay as you drive” insurance. With this type of coverage, you agree to allow the insurer to monitor your driving behavior. If you exhibit good driving habits, you can get a significant discount on your insurance rates.
Conversely, some insurance companies may actually raise your rates if your habits suggest you are a poor driver.
