How Much Auto Insurance Do I Need?

If you own a car, you must demonstrate “financial responsibility”. This means you can pay if you or someone else driving your car causes an accident.

All states have some form of financial responsibility law, and most drivers meet this requirement by having auto insurance. This is usually the easiest and most cost-effective method. If you don’t want auto insurance, some states may require you to put down a deposit of $50,000 or more to show you’re financially responsible.

Once you’ve dismissed the idea of ​​paying tens of thousands of dollars or more to the state, the next logical question is: How much car insurance do you need?

How Much Auto Insurance Do I Need?

How much car insurance do you need? The answer depends on many factors, such as where you live, the value of your car, and other assets you need to protect. Here’s what you need to know:

Most states require you to carry at least accidental injury and property damage insurance. Optional accident compensation covers damage to your vehicle in an accident.

Optional comprehensive coverage protects against other perils such as theft and fire. Uninsured motorist insurance, which is mandatory in some states, protects you if you are hit by an uninsured driver.

CoverageOkayGoodEven Better
Liability car insuranceState minimum• $100,000 per person for bodily injury liability • $300,000 per accident for bodily injury liability • $100,000 for property damage• $250,000 per person for bodily injury liability • $500,000 per accident for bodily injury liability • $250,000 for property damage
Uninsured/underinsured motorist coverageState minimum• $100,000 per person for bodily injury liability • $300,000 per accident for bodily injury liability• $250,000 per person for bodily injury liability • $500,000 per accident for bodily injury liability
Personal injury protection (PIP)State minimum$40,000State maximum
Collision coverageNot requiredRecommendedRecommended
Comprehensive coverageNot requiredRecommendedRecommended

Car insurance can include several different types of coverage. Your independent insurance agent will provide professional advice on the type and amount of auto insurance you need to meet your individual needs and comply with your state’s laws. Here are the principal kinds of coverage that your policy may include:

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Liability insurance

Minimum personal injury coverage varies by state and can be as low as $10,000 per person or $20,000 per accident. Many auto insurances limit liability coverage to $300,000 or $500,000 per accident.

If you hurt someone with your car, you could be sued for a lot of compensation. In case of an accident, the amount of liability insurance should be high enough. Most experts recommend a minimum limit of $100,000/$300,000, but sometimes that’s not enough.

This is not the place for cheap car insurance. If you own a million-dollar home, you could lose your home to a lawsuit if your insurance coverage is inadequate. The higher the value of the property, the greater the loss, so it is necessary to take out liability insurance in proportion to the value of the property.

How much liability insurance should I buy?

A good rule of thumb is to have enough liability insurance to cover what you might lose in a lawsuit after a car accident. For example, in California, a 250/500/100 policy is a much better choice than the state minimum.

If you need additional liability coverage in addition to your basic auto and home insurance, consider purchasing umbrella insurance. For a relatively small amount, you can purchase more than $1 million in liability insurance through umbrella policies.

Property Damage Liability

Coverage: Property damage liability covers the cost if you or your family members damage someone else’s car or other property (trees, fences, etc.) in an accident.

How much you need: Similar to personal injury liability, almost all states require some amount of property damage coverage. A 25/50/20 policy provides $20,000 of coverage because it appears on the policy as the third number in the order. Some states require $10,000 or $5,000 in property damage liability insurance, but minimums of $20,000 or $25,000 are most common.

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Again, we recommend purchasing more than your state minimum. But unless you hit a Lamborghini or a Rolls-Royce, you’re probably facing no greater financial risk than an accident in which people are seriously injured. The general recommended property damage coverage level is $50,000. Even if you have significant assets to protect.

Medical Payments (MedPay) or Personal Injury Protection (PIP)

Coverage: Unlike bodily injury liability insurance, medical payments (MedPay) or personal injury insurance (PIP) covers the cost of injuries to the driver and occupants of the vehicle. In some cases, lost wages due to injuries sustained in accidents are also covered.

How much you need: Whether medical payments or PIP coverage is required, optional, or available varies by state. States with no-fault insurance laws, such as Florida and New York, require PIP. For example, Florida requires drivers to have at least $10,000.

If you and your family already have adequate health insurance, you may not need to purchase more than the minimum PIP coverage. However, if you do not have health insurance, we recommend purchasing more.

This is especially true in a state like Florida where $10,000 is not enough coverage in the event of a serious accident.

Collision and comprehensive insurance

If you want to cover the cost of repairing your car, you need collision and comprehensive insurance. They are often sold together and cover a variety of topics including car accidents, car theft, vandalism, animal collisions, falling objects, fire, flood and hail damage. If you have a car loan or lease, your lender or leasing company will likely require you to carry both.

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Collision – Covers costs if your car is damaged in an accident. No need to know the purchase amount. It depends on which vehicle you have insurance for. However, you must decide whether to buy it and what the deductible is.

The higher the deductible, the lower the premium. Deductibles typically range from $250 to $1,000. Collision coverage is important when the car is new and valuable, but becomes less important as the car depreciates. If your car is worth $1,000 and your deductible is $500, it may not make sense to purchase collision coverage. State law generally does not require collision insurance.

Comprehensive – Covers the cost of various damages to your vehicle due to non-collision such as fire and theft. As with Collision Compensation, you must choose a deductible. The higher the deductible, the lower the premium.

Comprehensive coverage is usually sold together with a collision, and the two are often collectively known as physical damage coverage. If the vehicle is leased or financed, the lessor or lender may require physical damage coverage, even if state law does not require it.

How much collision and comprehensive insurance should I buy? Both types of coverage cover the cost of repair or replacement if your vehicle is damaged due to issues covered by the policy. If you want to reduce costs, choose a higher deductible. If you apply for insurance, this responsibility will be on you. For example, a $1,000 deductible is slightly less expensive than a $500 deductible.

Uninsured/Underinsured Motorist (UM/UIM)

Uninsured motorist insurance covers you if you’re hit by an uninsured driver, have an accident, or hit someone who doesn’t have enough coverage to pay for all the damages.

Do you need it? 20 states and the District of Columbia require uninsured motorist insurance and 14 states require uninsured motorist insurance.

Recommendation: Affordable and very convenient, it’s worth adding uninsured/underinsured motorist insurance to your policy, even if it’s not required by state law.

How much uninsured motorist coverage should I buy? For example, if you have 250/500/100, you must purchase the same amount of UM coverage.

Car Insurance Requirements by State

StateBodily Injury Liability (per person)Bodily Injury Liability (per accident)Property Damage LiabilityOther Requirements
Alabama$25,000$50,000$25,000N/A
Alaska$50,000$100,000$25,000N/A
Arizona$25,000$50,000$15,000N/A
Arkansas$25,000$50,000$25,000N/A
California$15,000$30,000$5,000N/A
Colorado$25,000$50,000$15,000N/A
Connecticut$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Delaware$25,000$50,000$10,000Personal Injury Protection:
$15,000 per person
$30,000 per accident
FloridaN/AN/A$10,000Personal Injury Protection: $10,000
Georgia$25,000$50,000$25,000N/A
Hawaii$20,000$40,000$10,000Personal Injury Protection: $10,000
Idaho$25,000$50,000$15,000N/A
Illinois$25,000$50,000$20,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Indiana$25,000$50,000$25,000N/A
Iowa$20,000$40,000$15,000N/A
Kansas$25,000$50,000$25,000Personal Injury Protection: $4,500

Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Kentucky$25,000$50,000$25,000N/A
Louisiana$15,000$30,000$25,000N/A
Maine$50,000$100,000$25,000Uninsured Motorist:
$25,000 per person
$50,000 per accident

MedPay: $2,000
Maryland$30,000$60,000$15,000Uninsured Motorist:
$30,000 bodily injury per person
$60,000 bodily injury per accident
$15,000 property damage
Massachusetts$20,000$40,000$5,000Personal Injury Protection: $8,000

Uninsured Motorist:
$20,000 bodily injury per person
$40,000 bodily injury per accident
Michigan$50,000$100,000$10,000Personal Injury Protection: $250,000 for most drivers

Property Protection Insurance: $1,000,000
Minnesota$30,000$60,000$10,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident

Personal Injury Protection: $40,000
Mississippi$25,000$50,000$25,000N/A
Missouri$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Montana$25,000$50,000$20,000N/A
Nebraska$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Nevada$25,000$50,000$20,000N/A
New Hampshire$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident

MedPay: $1,000
New JerseyN/AN/A$5,000Personal Injury Protection: $15,000 (up to $250,000 for certain injuries)
New Mexico$25,000$50,000$10,000N/A
New York$25,000$50,000$10,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident

Personal Injury Protection: $50,000
North Carolina$30,000$60,000$25,000Uninsured Motorist:
$30,000 bodily injury per person
$60,000 bodily injury per accident
$25,000 property damage
North Dakota$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident

Personal Injury Protection: $30,000
Ohio$25,000$50,000$25,000N/A
Oklahoma$25,000$50,000$25,000N/A
Oregon$25,000$50,000$20,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident

Personal Injury Protection: $15,000
Pennsylvania$15,000$30,000$5,000Personal Injury Protection: $5,000
Rhode Island$25,000$50,000$25,000N/A
South Carolina$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
$25,000 property damage
South Dakota$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Tennessee$25,000$50,000$15,000N/A
Texas$30,000$60,000$25,000N/A
Utah$25,000$65,000$15,000Personal Injury Protection: $3,000
Vermont$25,000$50,000$10,000Uninsured Motorist: $50,000 bodily injury per person
$100,000 bodily injury per accident
$10,000 property damage per accident
Virginia$30,000$60,000$20,000Uninsured Motorist:
$30,000 bodily injury per person
$60,000 bodily injury per accident
$20,000 property damage
Washington$25,000$50,000$10,000N/A
West Virginia$25,000$50,000$25,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
$25,000 property damage
Wisconsin$25,000$50,000$10,000Uninsured Motorist:
$25,000 bodily injury per person
$50,000 bodily injury per accident
Wyoming$25,000$50,000$20,000N/A

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