How Much Car Insurance Do I Need?

Car insurance is a legal requirement in every state except New Hampshire. State-required liability-only insurance only covers damage to a third party’s car or another person’s injuries. So, consider the state requirements the bare essentials for car insurance — for your own vehicle and injuries, minimum coverage isn’t enough.

Bodily Injury and Property Damage Liability

In general, it’s a good idea to raise your liability limits about the state-required minimum to at least $100,000 in bodily injury liability per person/$300,000 per accident, and $100,000 in property damage liability. This is also known as 100/300/100 coverage. Raising your limits protects your assets in the event of a serious at-fault accident.

Uninsured/Underinsured Motorist Coverage

Uninsured/underinsured motorist (UM/UIM) coverage protects you if you’re in an accident with a driver who has little or no insurance, or a hit-and-run (including as a pedestrian or cyclist). This coverage helps pay for medical expenses, lost wages, and other costs if the at-fault driver can’t cover them. Since many drivers carry only the minimum insurance or none at all, having UM/UIM coverage is important to safeguard yourself financially in these situations. Match your UM/UIM limits to your bodily injury and property damage liability limits.

Medical Payments/Personal Injury Protection

Medical payments (MedPay) and personal injury protection (PIP) cover medical expenses for you and your passengers, regardless of fault. PIP often goes further by covering lost wages and other costs related to injuries from an accident. Some states require MedPay or PIP, while others offer it as optional coverage. Consider at least a few thousand dollars of this coverage if you want extra protection for medical expenses not covered by health insurance.

Collision and Comprehensive

In cases such as at-fault accidents, extreme weather, or car theft, you need collision and comprehensive coverage to be financially protected. While collision and comprehensive are not required by law, if you loaned or leased your vehicle, your lender may require you to carry them.

The lower your deductible, the higher your premiums, and vice-versa. Agents recommend getting as high of a deductible as you can comfortably afford to pay in a claim. In general, a $500 or $1,000 is a good balance between keeping premiums reasonable and the deductible affordable. The average deductible is $500.¹

In most states car insurance is a legal requirement. At the bare minimum, car insurance means that if you cause an accident and injure someone or damage their car, their vehicle will be repaired and their medical expenses covered. More coverage means more protection in the event of an accident.

If your car is leased versus owned outright, you  may also be required to carry a certain amount of coverage for a lease contract.

What Is State Minimum Insurance Coverage?

State minimum insurance coverage is the legally required minimum amount of liability insurance that all cars must have. Every state (except New Hampshire) has its own auto insurance requirements. Failure to adhere to these requirements can result in fines, license suspension, or even imprisonment in certain cases.

What Happens If You Get Caught Driving Without Insurance?

Penalties vary from state to state. However, most states will give a driver fines and will suspend their driver’s license or the car registration for failing to meet the legal requirements. Fines range from $25 to $1,500 and up to five years in prison.

The below table shows the penalties for the first time you are caught driving without insurance. Being caught without insurance multiple will result in more severe penalties.

One of the biggest differences between minimum and full coverage is that minimum coverage doesn’t pay for injuries to you or your passengers or damage to your vehicle. Full coverage means that you have protection for both yourself, and others.

This includes additional coverages: collision insurance, comprehensive insurance, uninsured motorist coverage, and medical expenses coverage/personal injury protection for medical bills. Full coverage doesn’t necessarily include gap insurance, roadside assistance, or rental car reimbursements, or any other type of insurance like health insurance. These types of coverage are often available as add-ons.

Car insurance costs will vary widely depending on the state that you live in and the type of coverage that you choose, as well as other factors like your driving history, age, and credit score. On average, a full coverage policy costs $1,924 annually, while a minimum coverage costs $547 annually. The table below shows average national average costs for full and minimum coverage, as well as average auto insurance costs for drivers with a DUI, poor credit, a low-credit score, and a recent accident.

To buy car insurance:

1. Decide how much coverage you want, whether it’s just the state minimum requirements or additional coverage like medical payments coverage, which not every state requires.
2. Get quotes from multiple carriers.
3. Review the coverage limits of each quote.
4. Choose the best policy for the price.
5. Contact an agent.
6. Pay for the policy to bind it.

Learn more about how to buy auto insurance in our guide for first-time insurance buyers.

While you absolutely need to meet state minimum insurance requirements, you’ll want to have enough insurance to protect yourself from liability and to protect your car should it get damaged. This means adding full coverage with comprehensive and collision coverage to the policy. In general, it’s a good idea to carry the following coverages:

• Bodily injury liability: $100,000 per person/$300,000 per accident
• Property damage liability: $100,000 per accident
• Uninsured/underinsured motorist coverage: same limits as liability
• Medical payments/personal injury protection
• Collision and comprehensive