How Much Car Insurance Do You Need?

There’s no one-size-fits-all answer to the question “How much car insurance do I need?” Minimum car insurance requirements vary by state, and other factors also affect your coverage needs, like the vehicle you drive, your assets, and driver ages in your household.
For example, comprehensive coverage, collision coverage, and gap insurance might make sense if you have a new car loan but may not be worth it if you drive an older, cheaper vehicle.
This article will break down the minimums required in your state, when to consider full coverage, and explanations of insurance coverages to help you compare insurance quotes.

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Do You Need Car Insurance?

All states except New Hampshire and Virginia require you to purchase a minimum amount of liability coverage to drive legally. New Hampshire requires you to prove financial responsibility equal to its minimum coverage.
Virginia drivers must pay an annual $500 uninsured motorist fee to drive uninsured. But Senate Bill 951 recently repealed the uninsured motorist fee option, requiring all drivers to meet the state’s minimum car insurance requirements as of July 1, 2024.
Even though you don’t have to purchase the minimum amount of car insurance in those states, you’re still legally responsible for any injuries or damage you cause in an auto accident. And if you finance or lease your vehicle, your lender or leasing company will require you to have full-coverage car insurance.
If you’re caught driving uninsured, you could face fines, jail time, and license or vehicle registration suspension or revocation.

Minimum Car Insurance Requirements by State

Minimum requirements for auto insurance vary by state, but each state requires drivers to have basic liability insurance. Bodily injury and property damage liability insurance cover the other driver and passengers if you cause a car accident.
Your state might also require you to have medical payments coverage (MedPay), personal injury protection (PIP), and uninsured or underinsured motorist coverage. We discuss these coverages in detail later.
New Hampshire and Virginia don’t currently require insurance coverage, but that will change in Virginia in 2024 and could change in New Hampshire.
The table below shows each state’s minimum limits and coverage requirements.

Should You Get Full-Coverage Car Insurance?

It makes sense to buy full coverage if you finance or lease your car and the lender requires it. But it can also be worth it if you can’t afford to repair or replace your vehicle out of pocket. MedPay or PIP can be a cheaper way to pay your medical expenses if you don’t have health insurance or have a high deductible.
Full-coverage car insurance is a combination of liability insurance and other coverages such as:

• Comprehensive coverage

• Collision coverage

• PIP

• MedPay

• Uninsured/underinsured motorist coverage

If you choose liability-only coverage, you must pay for your vehicle damages if you cause an accident. But full coverage pays for your car’s damage after an accident, regardless of which driver is at fault.
PIP can also pay your medical bills and lost wages if you get hurt in an accident. Since you’re getting more coverage, you’ll pay higher premiums for full coverage than for  liability coverage.

Which Deductible Should You Choose?

A deductible is the money you pay toward a comprehensive or collision claim before your insurance company will cover the repairs. You only have to pay the deductible if you file an auto insurance claim, unlike your premiums, which you have to pay monthly or at each renewal.
The deductible you choose will affect your car insurance premium. Choosing a higher deductible will help you get lower rates because you take on more risk. But if you choose a lower deductible, you’ll pay higher rates because the insurance company takes on more risk.
The most common comprehensive and collision deductibles are $500 or $1,000. Options vary by auto insurance company but are usually:

• $250

• $500

• $1,000

• $2,000

• $2,500

You can also choose different deductibles for each coverage.

Auto Insurance Coverages Explained

Knowing the different types of coverage and how they work makes choosing the right amount easier. Here are the most common coverages available.

Liability insurance

There are two types of liability insurance: bodily injury liability and property damage liability. Bodily injury pays for injuries you cause to others, while property damage liability pays for damage you cause to their property, like a vehicle, fence, or house.
As previously mentioned, all states except New Hampshire and Virginia require liability insurance. Minimum coverage limits vary by state — some limits are as low as 15/30/5.
But the most common liability limits drivers buy are 50/100/50 and 100/300/100. If you buy 50/100/50, that means the most your insurance company will pay per claim is:

• $50,000 per person for bodily injury

• $100,000 per accident for bodily injury

• $50,000 per accident for property damage

A good rule of thumb when choosing liability limits is to consider your net worth. If you don’t have enough liability insurance to cover injuries and property damage after an accident, you can be sued by the other party — leaving your assets at risk. Consider buying umbrella insurance if you have more assets than the maximum available liability limits.

Collision insurance

Collision insurance is optional in all states — but it’s required by your lender for leased or financed cars. Collision covers damage to your vehicle when it collides with another car or object and when you’re in single-vehicle accidents.
Purchasing collision coverage is beneficial for different reasons. If you rear-end someone, lose control of your vehicle, and hit a guardrail, or if someone hits your car while parked and unoccupied, this add-on coverage will pay to repair or replace your vehicle — minus your deductible.

Comprehensive coverage

Another optional coverage in all states is comprehensive insurance. Like collision, comprehensive coverage will be required by your lender in certain circumstances.
Sometimes called other-than-collision insurance, comprehensive pays for damages not covered by collision, such as:

• Animal or pest damage

• Weather events like earthquakes, fire, hail, and windstorms

• Damage from falling or flying objects

• Civil unrest or riot damage

• Vehicle theft

• Vandalism

Uninsured/underinsured motorist coverage

Uninsured motorist coverage pays for damages if you get hit by someone who doesn’t have auto insurance coverage. One in eight U.S. drivers doesn’t have insurance, according to the Insurance Research Council (IRC). This coverage can be useful to protect you against hit-and-run and uninsured drivers.
Underinsured motorist coverage kicks in if a driver with car insurance hits you, but they don’t have enough liability insurance to cover your injuries.
State laws in almost half the country require uninsured/underinsured motorist coverage at the same limits as liability insurance, and you may have to pay a deductible if you file a claim. The following states require this coverage:

• Connecticut

• Delaware

• Illinois

• Kansas

• Maine

• Maryland

• Massachusetts

• Minnesota

• Missouri

• Nebraska

• New Hampshire

• New York

• North Carolina

• North Dakota

• Oregon

• South Carolina

• South Dakota

• Vermont

• Virginia

• Washington, D.C.

• West Virginia

• Wisconsin

Personal injury protection (PIP)

Personal injury protection covers your and your passengers' injuries and medical costs when you’re injured in an accident, regardless of fault. It can also pay for your lost wages if you miss work due to your injuries, funeral expenses if someone dies because of an accident, and the mileage used to go to injury-related doctor appointments and in-home care services, like childcare and housekeeping.
Drivers in no-fault states must have PIP coverage. It’s optional in some at-fault states but mandatory in others. If you live in the following states, you must have some level of PIP coverage:

• Delaware

• Florida

• Hawaii

• Kansas

• Kentucky

• Maryland

• Massachusetts

• Michigan

• Minnesota

• New Jersey

• New York

• North Dakota

• Oregon

• Pennsylvania

• Utah

Medical expenses (MedPay)

MedPay is similar to PIP but is only required in Maine and New Hampshire and doesn’t cover lost wages or in-home services.
It covers medical costs for injuries you receive as a driver, passenger, or pedestrian struck by a vehicle. Medical benefits include:

• Ambulance costs

• Dental procedures

• Diagnostics, like X-rays or CT scans

• Physical therapy

• Health insurance deductibles

Gap insurance

Optional in all states, gap insurance applies when your vehicle is totaled in an accident. If you owe more than the car is worth when it’s totaled, gap insurance will pay the difference between your loan or lease balance and what the insurance company pays for the total loss.
For example, let’s say your car is worth $15,000, you owe $20,000, and you have a $1,000 collision deductible. You rear-end someone and total your vehicle. The most the insurance company will pay is $14,000, the actual cash value minus your deductible. Gap insurance will cover the remaining $6,000.

Car Insurance Requirements FAQs

Sources

1. Insurance Information Institute, “8 auto insurance myths,” Accessed October 16, 2023.

2. Insurance Information Institute, “Nine ways to lower your auto insurance costs,” Accessed October 16, 2023.

3. Insurance Research Council, “One in Eight Drivers Uninsured,” Accessed October 10, 2023.

4. LegiScan, “VA SB951 | 2023 | Regular Session,” Accessed October 14, 2023.