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Published: January 10, 2022Last updated: October 18, 2022

How Much Car Insurance Do I Need?

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.

How Much Car Insurance Do I 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.

Document labeled "Insurance Policy" on a clipboard; a vehicle covered by an umbrella.

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.

Why You Need Car Insurance

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.

CheckTIP

Don’t drive without insurance. You can lose your license.

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 and Virginia) has its own auto insurance requirements that your car must adhere to in order to be registered for the road.

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.

State Fines Other penalties Jail time
Alabama $500 Registration suspension None
Alaska $500 License suspension None
Arizona $500 License and registration suspension None
Arkansas $50 Registration suspension Up to one year
California $100 None None
Colorado $500 License suspension None
Connecticut $100 License and registration suspension Up to five years
Delaware $1,500 License suspension None
District of Columbia $150 License suspension None
Florida $150 License suspension None
Georgia $200 License and registration suspension Up to one year
Hawaii $500 License suspension None
Idaho $75 None None
Illinois $500 License suspension None
Indiana $250 License suspension None
Iowa $250 None None
Kansas $300 License and registration suspension Up to six months
Kentucky $500 Registration suspension Up to 90 days
Louisiana $500 None None
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
Mississippi $500 License suspension None
Missouri $20 License suspension None
Montana $250 None None
Nebraska $100 License suspension None
Nevada $250 License 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
Ohio $100 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
Tennessee $300 License suspension None
Texas $175 None None
Utah $400 License suspension None
Vermont $250 License suspension None
Virginia $600 License suspension None
Washington $550 None None
West Virginia $200 License suspension Up to one year
Wisconsin $500 None None
Wyoming $250 License suspension Up to six months

Minimum Coverage vs. Full Coverage

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.

Two vehicles side by side. Text reads "Full Coverage versus Minimum Coverage"

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.

Is State Minimum Coverage Enough?

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.

CheckNOTE

State minimum coverage is rarely enough coverage to protect a driver properly.

Are there Different Requirements for Leased Vehicles?

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.

How to Choose Higher Limits

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.

How Big of a Deductible Should You Have?

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

What Is the Cost of Car Insurance?

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)
North Dakota $686.08
Maine $686.25
Iowa $700.71
South Dakota $721.67
Idaho $722.06
North Carolina $734.06
Wisconsin $755.97
Wyoming $765.81
Indiana $767.72
Vermont $778.29
Ohio $794.91
Nebraska $796.87
Kansas $805.15
Montana $825.87
Hawaii $829.15
New Hampshire $847.58
Virginia $853.78
Tennessee $855.78
Minnesota $872.65
Arkansas $898.89
Alabama $904.56
Missouri $913.81
Oklahoma $915.49
New Mexico $915.62
Illinois $916.49
Kentucky $936.91
West Virginia $938.71
Utah $941.14
Alaska $965.44
Mississippi $971.19
Oregon $990.21
Pennsylvania $991.23
California $1,034.05
Washington $1,035.34
Arizona $1,046.40
South Carolina $1,093.97
Colorado $1,132.81
Texas $1,152.25
Massachusetts $1,167.16
Maryland $1,211.83
Georgia $1,212.04
Connecticut $1,216.55
Nevada $1,260.43
Delaware $1,291.39
Rhode Island $1,333.12
New Jersey $1,385.61
New York $1,425.00
Florida $1,426.46
D.C. $1,429.43
Michigan $1,469.73
Louisiana $1,545.822

How to Buy Car Insurance

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 car insurance FAQs.

Person holding a magnifying glass over a computer screen

Recap

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.

Citations

  1. How Do Auto Insurance Deductibles Work? American Family Insurance. (2022).
    https://www.amfam.com/resources/articles/understanding-insurance/how-do-deductibles-work

  2. Auto Insurance Database Report 2017/2018. National Association of Insurance Commissioners. (2021, Feb).
    https://content.naic.org/sites/default/files/publication-aut-pb-auto-insurance-database.pdf