How much car insurance do I need?
Published January 15, 2026
Every state sets minimum auto insurance requirements, but state minimums rarely cover the true cost of a serious accident. The right amount of coverage depends on what you own, what you drive, and how much risk you're comfortable absorbing.
Start with state minimums
At a baseline, your policy must meet your state's required liability limits. These cover injuries and property damage you cause to others. Limits are written like 25/50/25 — meaning $25,000 per person, $50,000 per accident, and $25,000 for property damage.
Match liability to your net worth
If you have savings, a home, or future earnings to protect, raise liability well above state minimums. A common recommendation is 100/300/100, with an umbrella policy on top for higher net worth.
Consider comprehensive and collision
If your vehicle is financed or leased, your lender almost always requires both. If you own the car outright, weigh the replacement value against your annual premium and deductible.
Don't forget uninsured motorist coverage
Many drivers on the road are underinsured or uninsured. Uninsured/underinsured motorist coverage steps in when the at-fault driver can't pay — it's often inexpensive and well worth it.
Quick checklist
- Meet state minimums (required)
- Liability sized to your assets (recommended 100/300/100+)
- Comprehensive/collision if the car is financed or valuable
- Uninsured motorist coverage
- Optional add-ons: roadside, rental reimbursement, gap insurance
Frequently asked questions
- What happens if an accident costs more than your insurance limits?
- Your insurer pays up to your policy limits, and you are personally responsible for anything above them. The injured party can sue you for the difference, and a court judgment can reach savings, property, and, in many states, future wages, though state exemption laws protect some assets. That's why many advisers suggest liability limits at least equal to your net worth rather than state minimums.
- What does 100/300/100 mean on a car insurance policy?
- Those numbers are liability limits expressed in thousands of dollars: $100,000 of bodily injury coverage per person, $300,000 of bodily injury coverage per accident, and $100,000 per accident for property damage you cause. It's a widely recommended step up from state minimums for drivers with savings, a home, or income to protect after an at-fault accident.
- When should you drop comprehensive and collision coverage?
- Consider dropping them once your car is paid off and its market value is low relative to what you pay in premiums plus your deductible. Compare the most the insurer could pay out — your car's actual cash value minus the deductible — against the coverage's annual cost. Lenders and lessors typically require both while a loan or lease is active.
- Do I need an umbrella policy with my car insurance?
- Not everyone needs one, but an umbrella policy makes sense when your net worth exceeds the liability limits your auto policy offers. It adds an extra layer of liability protection above your auto and home limits, and insurers generally require certain underlying auto liability limits to qualify. It's most useful for people with significant assets or income to protect.
Sources & references
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