Every car needs at least the state minimum required insurance liability limits.
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There are two ways to look at how much car insurance you need. The first is to consider the state minimum requirements. The second is to consider how much protection you need to avoid lawyers targeting your personal assets. Let’s look at the considerations that go into figuring out how much car insurance you need.
In every state except New Hampshire and Virginia, car insurance is required by law. The state requirements are the bare essentials for car insurance. But the state limits consider only the damage to a third party’s car or another person’s injuries.
The limits don’t consider fixing your own car in at-fault accidents or unexpected incidents such as hail storms. What about if your car is stolen and you need to replace your car?
In these cases, you need collision and comprehensive coverage, respectively. You should carefully consider how much insurance you have to make sure you are adequately protected. You want protection from both liability claims and damage to your own vehicle from all types of claims, including uninsured motorist incidents.
You need to have car insurance because it is the law in most states. Also, you may be required to carry a certain amount of coverage for a lease contract. You also need car insurance to make sure that your car will be fixed after an accident. This is particularly important for at-fault accidents and uninsured motorist incidents.
Don’t drive without insurance. You can lose your license.
State minimum insurance coverage is the legally required minimum amount of liability insurance that all cars must have. Every state (except New Hampshire and Virginia) has its own auto insurance requirements that your car must adhere to in order to be registered for the road.
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.
|State||Fines||Other penalties||Jail time|
|Arizona||$500||License and registration suspension||None|
|Arkansas||$50||Registration suspension||Up to one year|
|Connecticut||$100||License and registration suspension||Up to five years|
|District of Columbia||$150||License suspension||None|
|Georgia||$200||License and registration suspension||Up to one year|
|Kansas||$300||License and registration suspension||Up to six months|
|Kentucky||$500||Registration suspension||Up to 90 days|
|Maine||$100||License and registration suspension||None|
|Maryland||$1,000||None||Up to one year|
|Massachusetts||$500||License and registration suspension||Up to one year|
|Michigan||$200||License suspension||Up to one year|
|Minnesota||$200||License and registration suspension||None|
|New Hampshire||$125||License and registration suspension||None|
|New Jersey||$300||Licenses suspension||None|
|New Mexico||$300||License and registration suspension||Up to 90 days|
|New York||$150||License and registration suspension||Up to 15 days|
|North Carolina||$50||License suspension||None|
|North Dakota||$300||License suspension||None|
|Oklahoma||$250||License suspension||Up to 30 days|
|Oregon||$130||License and registration suspension||None|
|Pennsylvania||$300||License and registration suspension||None|
|Rhode Island||$100||License and registration suspension||None|
|South Carolina||$550||License suspension||None|
|South Dakota||$100||License suspension||Up to 30 days|
|West Virginia||$200||License suspension||Up to one year|
|Wyoming||$250||License suspension||Up to six months|
Don’t make the mistake of thinking that having the state minimum coverage is having full coverage. Remember that state liability laws don’t cover your own vehicle. Full coverage means that you have protection for others and yourself.
This includes additional coverages: collision insurance, comprehensive insurance, uninsured motorist coverage, and medical expenses coverage/personal injury protection for medical bills. It doesn’t include gap insurance, roadside assistance, or rental car reimbursements, or any other type of insurance like health insurance.
Note that collision coverage also covers the cost of any lost wages you incurred as a result of an at-fault accident, up to your limit. Beyond that, you’ll have to pay out of pocket.
While the state minimum coverage is enough to prevent you from getting a ticket for not having insurance, it may not cover all the liability you could incur in an accident, nor will it cover your car’s damages in a claim. Evaluate your needs by talking to an auto insurance agent.
If the state minimum coverage is 15/30/5, this means you are protected only from liabilities of $15,000 in injuries per person, $30,000 in total injuries per accident, and $5,000 in property damage. A fender bender can often cause more than $5,000 in damages, which you may be liable for.
State minimum coverage is rarely enough coverage to protect a driver properly.
Leasing companies have minimum requirements for liability insurance that are often higher than state minimum requirements. Most leasing companies require at least 100/300/50 for leased vehicles.
Choosing higher limits depends on your unique circumstances. You want to have enough coverage to protect your personal assets while staying within budget for the cost of insurance. Ask your insurance agent to give you a quote for higher liability limits. To avoid being sued, those with a high net worth should consider having high liability limits.
Choosing a deductible for your collision and comprehensive coverage is a balancing act between cost and personal resources. Remember that deductibles pertain to when you need to get your car fixed. You pay them as your portion of the claim.
The lower the deductible, the higher the premium. Agents recommend getting as high of a deductible as you can comfortably afford to pay in a claim. The average deductible is $500.1
Car insurance costs will vary widely depending on the state that you live in and the type of coverage that you choose. According to the most recent federal data available, the average monthly cost of auto insurance in 2018 was $83.12, with a range of $119.12 at the high end and $60.14 at the low end.
|State||Average monthly expenditure for auto insurance in 2018 (low to high)|
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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.
How Do Auto Insurance Deductibles Work? American Family Insurance. (2022).
Auto Insurance Database Report 2017/2018. National Association of Insurance Commissioners. (2021, Feb).