How Much Car Insurance Do I Need?

Car insurance is a legal requirement in every state except New Hampshire (even there, you must prove financial responsibility in the event of an accident). State-required liability-only insurance covers just the basics: damage to another party’s car or property, and/or the other party’s injuries in an accident you caused.

The requirements are the bare minimum you need to legally get behind the wheel—for your own vehicle and injuries, minimum coverage isn’t enough.

Bodily Injury and Property Damage Liability

Liability insurance is split into two parts: bodily injury liability, which pays for medical costs, lost wages, and legal fees if you injure someone else in an at-fault accident, and property damage liability, which covers repairs to another person’s vehicle or property.

State minimums are often set quite low — sometimes as little as $25,000 per person — which can leave you financially exposed if a crash causes serious injuries or totals an expensive vehicle. If your limits aren’t enough to cover the damages, you’re vulnerable to a lawsuit.

For adequate protection, it’s ideal to raise your liability limits above 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 so a lawsuit or major repair bill doesn’t come out of your own pocket.

Car insurance is a legal requirement in most states. At the bare minimum, car insurance means that if you cause an accident resulting in injury or damage to the other party, their vehicle gets repaired and their medical expenses get covered. Beyond that, more coverage means more protection in the event of an accident.

If you’re leasing your car, your leasing company will likely require you to carry a certain level of coverage as part of your lease contract, which is typically higher than your state’s legal minimum requirements.

What Is State Minimum Insurance Coverage?

State minimum insurance coverage is the legally required amount of liability insurance that all cars must have. Every state sets its own auto insurance requirements. If you don’t meet these requirements, you may face fines, license suspension, or even imprisonment.

What Happens If You Get Caught Driving Without Insurance?

Penalties for driving without insurance vary from state to state. In most states, drivers can expect fines and suspension of their driver’s license or vehicle for failing to meet the legal requirements. Fines range from $25 to $1,500 and up to five years in prison.

If you’re pulled over without proof of insurance, an officer will typically issue a citation on the spot, and you’ll have up to 30 days to show the court or DMV that you had valid coverage at the time you were pulled over. If you can’t, your license and registration will be suspended until you provide proof of insurance and pay any reinstatement fees.

Most states also require you to file an SR-22 once you’re reinsured, which tells your insurer to report your coverage directly to the state. This also means higher premiums for the next three to five years, since you’ll be considered a high-risk driver. Subsequent offenses within a few years usually bring steeper fines, longer suspensions, and in some states, jail time.

One of the biggest differences between minimum and full coverage comes down to who is protected. Minimum coverage typically only pays for the other party’s injuries and property damage. It won’t cover injuries to you or your passengers unless your state requires UIM, MedPay, or PIP. Minimum coverage also won’t pay to repair or replace your own vehicle.

Full coverage closes that gap by protecting both you and others involved in an accident. This includes additional coverages: higher liability limits, collision insurance, comprehensive insurance, uninsured motorist coverage, and medical expenses coverage/personal injury protection for medical bills.

Full coverage doesn’t automatically include gap insurance, roadside assistance, or rental car reimbursements. These coverages are often available as add-ons.

Car insurance costs vary depending on your state of residence and the coverage that you choose, as well as other factors like your driving history, age, and credit score. On average, a full coverage policy costs $2,356 annually, while a minimum coverage policy costs $722 annually.

The table below shows national average costs for full and minimum coverage, along with 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 on your level of coverage, whether it’s the state minimum requirements or includes additional coverage like gap insurance.
2. Get quotes from multiple providers.
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, meeting the bare minimum shouldn’t be the final goal. You want enough car insurance coverage to protect yourself from liability in a serious accident and to protect your car if it’s damaged. This means adding full coverage with comprehensive and collision coverage to your 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, with a deductible you can afford