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CAR INSURANCE INSIGHTS

How much auto insurance you need depends on your vehicle, finances, state, and what you want from coverage.

Getting behind the wheel of a car involves some level of risk. That's why it's important to have recommended auto insurance coverage in place. But you may be wondering: How much car insurance do I need? And what are my state's minimum car insurance coverage requirements?

Take the time to learn the facts and investigate how much coverage you need based on where you live, your driving history and habits and your budget.

KEY TAKEAWAYS
  • Car insurance is required in almost all states.
  • Liability coverage, which pays for damage and injuries to other people and vehicles, is required in most states, but state minimum requirements don’t offer enough coverage for most drivers.
  • Comprehensive and collision coverage, which covers your vehicle, isn’t required but can be vital if your car is damaged in an accident or otherwise.
  • Uninsured motorist and underinsured motorist coverage reimburse you when an uninsured or underinsured motorist causes an accident. It can also help if you’re involved in a hit-and-run accident. 

Is car insurance required?

All states require car insurance except for New Hampshire and Virginia. However, you must prove you can pay damages and injuries in those states if you’re in an accident.

States that require insurance have minimums for liability coverage. You’re not required to have other standard portions of auto insurance like comprehensive and collision coverage. That coverage isn’t required but is usually a good idea for most vehicles.

How much car insurance is needed?

How much auto insurance coverage you need depends on your vehicle, your financial status, state, and what you want from coverage.

For instance, if you have a newer vehicle, you want comprehensive and collision coverage to protect your vehicle if it’s damaged in an accident or otherwise. If you have an old car that’s no longer worth much, you may want to skip that coverage.

Regardless, it’s wise to have liability coverage to protect you and your finances if you’re to blame in an accident. Liability coverage, required in almost all states, pays for damage to other properties and bodily injuries to other drivers, passengers, and pedestrians.

Here are the different types of car insurance coverage that can help you if you’re in an accident:

Liability car insurance

One of the most important types is liability, which is mandatory coverage in nearly every state. The two types of liability coverage included in auto insurance policies are:

  • Bodily injury
  • Property damage

This coverage protects you against lawsuits. You want to have enough coverage to protect your property, including your home, and finances.

Bodily injury liability

Bodily injury liability coverage helps for costs associated with injuries and death that you or another driver causes while driving your vehicle.

Many states obligate you to have a minimum of $50,000 in bodily injury liability coverage, but it’s often recommended that drivers increase that coverage to $100,000 per person and $300,000 per accident.

Property damage liability

Property damage liability will reimburse others for damage that you or another driver operating your vehicle causes to another vehicle or other property, such as a fence, building, or utility pole. Most states require you to have no lower than $25,000 in property damage liability coverage.

"Having at least $100,000 in property damage coverage will protect most people from lawsuits or having to pay out of pocket after an at-fault accident," says Josh Damico, vice president of Insurance Operations for Jerry.

Experts recommend at least $100,000 in property damage coverage. You can also typically increase this coverage up to $300,000 to $500,000 per accident.

Collision and comprehensive coverage

Collision and comprehensive coverage help you if your car is damaged.

Collision coverage is an optional coverage that helps pay for repairs to your vehicle if you crash into another vehicle or object or suffer a rollover. It can also help cover the expense to replace your automobile if it’s totaled in an accident.

Comprehensive insurance, also optional, "provides coverage against theft and damage caused by an incident other than a collision, such as theft, vandalism, fire, flood, hail, falling rocks or trees, and other non-collision hazards," says Mark Friedlander, director of corporate communications for the Insurance Information Institute.

When it comes to collision and comprehensive coverage, the insurance company determines how much it will cover when you file a claim. Drivers choose the deductible, which is the amount of the claim the person pays. Deductibles are often between $250 and $1,000.

Choosing a higher deductible means you pay a lower premium, but it also means you have to pay more when you file a claim.

"If you have a less valuable or older car, collision coverage may not be worth the extra expense," says Damico. "If you have an auto loan or leased car, most lenders require that the vehicle carry both collision and comprehensive coverage."

Uninsured motorist (UM) and/or underinsured motorist (UIM) coverage

Uninsured motorist coverage reimburses you when an uninsured motorist causes an accident or when you’re involved in a hit-and-run accident.

UIM coverage kicks in when another driver lacks a sufficient amount of auto insurance to pay the costs of a serious accident. At least 22 states and the District of Columbia have uninsured and/or underinsured motorist coverage requirements. The required coverage limits vary by state.

"This is usually an affordable coverage to add on and a great way to further protect yourself from others on the road," suggests Tiffany Lemke, senior manager of Customer Experience for Metromile.

Personal injury protection and medical payments

Personal injury protection helps pay for medical costs and, depending on the state, lost wages, the cost of replacing services normally performed by someone injured in an auto accident, childcare, and/or funeral costs.

"For those who live in a no-fault state, personal injury protection coverage extends to you and passengers in your vehicle. It covers you regardless of fault and is primary coverage -- meaning you must submit your medical bills to your car insurance provider first," says Damico, who adds that PIP is mandatory in 13 states and strongly recommended in states where it’s not required.

Medical payments coverage -- only required in New Hampshire and Maine -- can help pay the medical deductibles and copayments that are covered by your health insurance or the insurance companies of any of your passengers. Many experts advise having at least $2,000 to $5,000 in medical payments coverage.

Gap insurance

Gap insurance helps drivers whose car get stolen or totaled and they still owe more on the vehicle than what it’s worth.

"Gap insurance covers the difference between a car's actual cash value when it is stolen or wrecked and the amount the consumer owes the leasing or finance company," adds Friedlander.

If you finance or lease your vehicle, you may be required to purchase gap insurance. If the debt you owe on a lease or loan is more than your vehicle is worth, getting gap insurance is a smart choice.

Optional types of car insurance coverage

There are other types of auto insurance coverage that aren’t mandatory but are often recommended. Explore each of these coverages and determine if their cost impact on your premium is worth it.

Roadside assistance

Roadside assistance commonly covers your vehicle if it breaks down, runs out of gas, suffers a flat tire or dead battery, or leaves you stranded.

"You can typically add roadside emergency assistance to your car insurance policy for a few dollars a month, or you can purchase a more comprehensive membership from a third-party provider for around $50 to $100 annually," says Damico.

Non-owner car insurance

Non-owner car insurance is an optional liability coverage policy for drivers who don't own a vehicle but need auto insurance.

"This can include someone who frequently rents cars or someone who is required to show proof of auto insurance and comply with their state's SR-22 requirement," says Friedlander.

Rental reimbursement

Rental reimbursement covers the cost of a rental vehicle if your automobile is not drivable after an accident, even if you are at fault.

"To get this coverage, many companies require you to have both comprehensive and collision insurance, and the amount of coverage you have will vary," Damico notes. "Most policies offer coverage from $20 per day to $90 a day."

Umbrella insurance

Umbrella insurance is a form of liability insurance that kicks in if a claim directly related to your vehicle or home exceeds your auto or homeowner policy's coverage limits.

"Most umbrella policy coverage starts at $1 million, meaning if you get into an accident and are at fault, it would cover up to $1 million in damages," adds Damico. "The cost for an annual umbrella policy is usually over $100 per year but varies, depending on the coverage limit."

Usage-based/pay-as-you-drive insurance

These types of insurance policies charge based on how often you drive, how far you drive, and/or your driving habits. If you drive infrequently, these policies can offer a great way to save money on car insurance.

"For example, with Metromile, if your base rate is $29, your per-mile rate is 6 cents, and you drive 450 miles in a month, your total auto insurance bill would be $57 for that month," explains Lemke.

Forgiveness coverage

Many carriers offer accident forgiveness coverage, which may prevent your auto premium from going up as a result of being involved in an at-fault accident (usually your first accident).

"Not all carriers offer this perk, and it usually requires being a customer with no accidents for a minimum of three to six years," Lemke says.

Glass coverage

Glass coverage handles the repair or replacement of your window or windshield glass if it’s cracked, chipped, or broken. Comprehensive coverage usually includes glass coverage at no extra cost, but you may have to pay your comprehensive deductible first.

"Carrying a separate or lower deductible for glass coverage is often best. Some companies offer full glass coverage or a zero dollar deductible, meaning you aren't required to pay anything if you need a new windshield or window," says Damico.

Minimum car insurance requirements by state

Every state has different requirements for the required minimum amount of insurance coverage, particularly regarding bodily injury liability and property damage liability coverage. Note that the nationwide average cost for state minimum liability coverage is $526.

Liability insurance is usually indicated by three numbers, such as 30/60/25.

  • The first number indicates the minimum coverage required for injuries to one person in an accident, in this example, $30,000.
  • The second number specifies the minimum coverage required for all injuries involved in an accident, in this instance, $60,000.
  • The third number stipulates the minimum coverage required for property damage involved in one accident, in this example, $25,000.

State liability requirements vary. Case in point: California requires liability coverages as low as 15/30/5, while Maine requires liability coverages of at least 50/100/25. State requirements are often not enough coverage to protect you properly. Experts recommend 100/300/100 as a minimum.

Average cost of car insurance by state

Average car insurance costs vary by state. They can also differ based on the driver’s age, driving record, location, and credit history.

Costs also depend on the coverage level. Whether you have full coverage or the state-mandated minimum liability coverage can mean a difference of hundreds or even thousands of dollars.

Here are the average car insurance costs by state for both full coverage and state minimum liability coverage.

Average Car Insurance Rates by State
StateFull coverage average annual premiumState minimum average annual premium
Alabama$1,713$498
Alaska$1,560$412
Arizona$1,783$578
Arkansas$1,763$449
California$2,125$606
Colorado$1,948$553
Connecticut$2,036$891
DC$2,188$839
Delaware$1,921$843
Florida$2,162$828
Georgia$1,865$684
Hawaii$1,589$485
Idaho$1,285$377
Illinois$1,538$493
Indiana$1,266$430
Iowa$1,352$326
Kansas$1,689$464
Kentucky$2,368$669
Louisiana$2,601$771
Maine$1,080$355
Maryland$1,816$853
Massachusetts$1,466$520
Michigan$3,141$1,855
Minnesota$1,619$614
Mississippi$1,684$413
Missouri$1,798$546
Montana$1,963$447
Nebraska$1,500$393
Nevada$2,402$717
New Hampshire$1,086$424
New Jersey$1,993$846
New Mexico$1,604$479
New York$2,062$867
North Carolina$1,425$438
North Dakota$1,577$423
Ohio$1,191$406
Oklahoma$1,815$418
Oregon$1,496$674
Pennsylvania$1,700$502
Rhode Island$2,040$738
South Carolina$1,653$617
South Dakota$1,643$323
Tennessee$1,493$462
Texas$1,823$538
Utah$1,492$565
Vermont$1,410$398
Virginia$1,196$380
Washington$1,620$537
West Virginia$1,654$541
Wisconsin$1,335$401
Wyoming$1,782$328

Frequently Asked Questions

How should you buy car insurance?

The Insurance Information Institute recommends getting a minimum of three auto insurance quotes from a mix of national and regional insurers when shopping for coverage.

"Working with an insurance agent can be very beneficial in this process. You can also engage online comparison tools that will price multiple carriers and provide information on a local agent you can work with," advises Friedlander.

Above all, remember that it pays to shop around and make apples-to-apples comparisons on coverage levels.

What deductible should you choose?

The most common deductibles most policyholders opt for are between $500 and $1,000. Friedlander notes that many drivers also choose deductibles as low as $250 and as high as $2,000.

"The deductible level you choose is a personal choice based on your financial situation. If you can afford a higher deductible, it will reduce your premium," he says.

What coverage is best?

The coverage limits that are right for you will depend on what is required in your state, your budget, your level of risk tolerance, and your driving habits and history.

In general, it's a smart idea to increase coverage levels across the board to ensure better protection in the event of an accident, injury, or other claim. Put another way, aim to get as much insurance coverage as you can afford, especially if you do a lot of driving.

What does 100/300/100 mean?

These three numbers indicate an auto policy's liability limits for bodily injury per person (in this case, $100,000), total bodily injury per accident ($300,000 using this example), and property damage per accident ($100,000 per this instance).

The recommended minimum liability coverage for most people is 100/300/100.

What states require additional PIP and UM coverage?

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

Twenty-three states require drivers to carry uninsured motorist coverage: Connecticut, District of Columbia, 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, and Wisconsin. Most of these same states also require you to carry at least some level of underinsured motorist coverage.

What happens if you get caught without car insurance?

The penalties for driving without auto insurance differ by state. Usually, you receive a fine if you’re pulled over for the first time and lack auto insurance. But in some states, your driver's license and registration could be suspended and you may be obligated to pay substantial fees to have them reinstated.

How do you choose a car insurance company?

The best way to choose a car insurance carrier is to shop around and request quotes from several different companies. Compare the coverage limits and deductibles carefully, research the insurer for financial viability, check its online reviews, and investigate its ratings from companies like A.M. Best and the Better Business Bureau.

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