Q

What Is Recommended For Car Insurance Coverage?

A

Each state has their own minimum insurance requirements, but most drivers need significantly more coverage to make sure they are fully protected.

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By

Rachael Brennan

Rachael Brennan

Property and Casualty Insurance Expert

Rachael Brennan is a senior insurance editor at Policygenius, specializing in auto insurance. She worked for 21st Century Insurance, BlueCross BlueShield Massachusetts, and HealthPass New York. She also spent two years working as a content expert for dozens of auto insurance websites through 360Quote LLC.

Published July 28, 2021|6 min read

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“What type of car insurance coverage do I need” is a simple question with a complicated answer. You need to have the right insurance coverage according to your state laws, but is that really enough? And what about people who are leasing or financing a car—what car insurance coverage should they have? There’s no one right amount of car insurance, but you need enough coverage to make sure you are protected in an accident.

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In order to choose the coverages that you need in your policy, it’s important that you understand the different types of car insurance coverage and how each one can protect you financially.

Key Takeaways

  • Most states require you to carry bodily injury and property damage liability insurance coverage, but a few states require other coverages beyond basic liability insurance

  • Drivers should carry at least $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability

  • Whether or not you are financing your vehicle, it is a good idea to add comprehensive and collision coverage if you can’t afford to repair or replace your vehicle if it is damaged or totaled

How much car insurance coverage you need depends on a number of factors. You need to meet your state’s required minimum levels of coverage to adhere to the law, but you may also need significantly more coverage or other types of coverage to make sure you are protected in the event of an accident.

To make sure you have enough liability coverage even in a serious accident, drivers should carry at least $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability, which is typically written as 100/300/100 on your insurance policy.

Coverage TypePolicy Limits
Bodily Injury Liability$100,000 per person/$300,000 per accident
Property Damage Liability$100,000 per accident
Personal Injury Protection$40,000 per person
Uninsured/Underinsured Motorist$100,000 per person/$300,000 per accident
Comprehensive$500 deductible
Collision$500 deductible

What does 100/300/100 mean?

Drivers who want to be well-protected should carry at least 100/300/100 levels of liability, which means $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 per accident in property damage liability. Having this much liability insurance will protect you in case you are at fault in an accident that caused a significant amount of damage.

When you are looking at 100/300/100 levels of liability insurance, the coverage breaks down like this:

  • 100 - The first number in your liability coverage, this is the maximum amount your insurance will pay toward bodily injury claims for an individual person. This number represents thousands of dollars, so a liability policy where the first number is 100 offers $100,000 for this coverage.

  • 300 - The second number in your liability coverage, this is the maximum amount your insurance company will pay for bodily injury claims for the accident in total. The individual maximum still applies, however, so if you hit someone and they need $174,000 in medical care, you will be held liable for the additional $74,000 above your $100,000 per person limit. This number represents thousands of dollars, so a liability policy where the second number is 300 offers $300,000 for this coverage.

  • 100 - The third number in your liability coverage, this is the maximum amount your insurance company will pay for property damage if you are at fault in an accident. Property damage isn’t limited to hitting another car; this is the coverage that will pay if you damage a house, run through a fence, or accidentally crash into the pump at your local gas station. This number represents thousands of dollars, so a liability policy where the third number is 100 offers $100,000 for this coverage.

If you can’t afford a minimum of 100/300/100 in liability coverage, your next best option is to choose the highest amount of liability coverage you can afford.

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Liability insurance

Some state minimum levels of liability insurance are very low — several states require a bare minimum of $5,000 worth of property damage coverage. This is enough to pay for a small amount of damage, but if you are found at fault in an accident with a luxury car or you accidentally drive into a home or business, the odds are good that $5,000 won’t even come close to covering those damages. 

If you are at fault in an accident you will be held liable for the resulting property damage and medical expenses. Drivers who don’t have enough liability coverage to cover those expenses will still be held responsible, which is why we recommend carrying a minimum of 100/300/100 in liability coverage.

Comprehensive and collision insurance

Often referred to as full coverage insurance, comprehensive and collision coverage are designed to cover damage to your vehicle, no matter who is at fault. These coverages aren’t required by law, but that doesn’t make them unnecessary. If you are financing your vehicle, your lender will require you to carry comprehensive and collision coverage as part of the terms of your loan. They may also require you to carry other coverages, such as gap insurance or windshield replacement coverage, to make sure their investment is protected.

Whether or not you are financing your vehicle, it is a good idea to carry comprehensive and collision coverage if you can’t afford to repair or replace your vehicle if it is damaged or totaled. Consider your personal finances carefully when thinking about whether or not you need full coverage insurance.

PIP and UM coverage

Uninsured or underinsured motorist coverage is coverage you have to protect yourself if you are hit by someone who is uninsured or underinsured. Twenty-two states and the District of Columbia require drivers to carry uninsured or underinsured motorist coverage, including:

  • Connecticut

  • Illinois

  • Kansas

  • Maine

  • Maryland

  • Massachusetts

  • Minnesota

  • Missouri

  • Nebraska

  • New Hampshire

  • New Jersey

  • New York

  • North Carolina

  • North Dakota

  • Oregon

  • Rhode Island

  • South Carolina

  • South Dakota

  • Vermont

  • Virginia

  • West Virginia

  • Wisconsin

  • District of Columbia

Personal injury protection provides bodily injury coverage to you and your passengers in the event of an accident, no matter who is at fault. Seventeen states require drivers to carry personal injury protection coverage, including:

  • Arkansas

  • Delaware

  • Florida

  • Hawaii

  • Kansas

  • Kentucky

  • Maryland

  • Massachusetts

  • Michigan

  • Minnesota

  • New Jersey

  • New York

  • North Dakota

  • Oregon

  • Pennsylvania

  • Puerto Rico

  • Utah

Additional types of coverage

We’ve talked about the minimum levels suggested for car insurance coverage, but what about people who need more than just basic coverage? There are multiple types of optional auto insurance add-ons available, including:

  • Medical payments - Also known as MedPay, this type of coverage pays a small amount toward your medical expenses in the event of an accident, no matter who is at fault. A small number of states require drivers to carry MedPay, but it is an optional add-on coverage in most states.

  • Roadside assistance - Roadside assistance is an additional coverage that can help cover the costs when your car breaks down. Roadside assistance covers services like towing your car, bringing you fuel if you run out, and jumpstarting your battery.  

  • Gap coverage - If you are financing your vehicle and your car gets totaled in an accident, you may discover that the value of your car is lower than the amount you still owe to your lender. This is especially common with financed vehicles that are totaled in the first year or two of ownership. Gap insurance will cover the difference between the value of your vehicle and the amount of your loan, preventing you from having to make payments on a car that no longer exists.

  • Rental reimbursement - Rental reimbursement will pay some amount toward the cost of a rental car if your car is in the shop due to a covered accident.

  • Glass breakage - Also known as full glass coverage, glass breakage may be available as part of your comprehensive coverage. It allows you to get broken glass in your vehicle repaired without having to pay a deductible. It isn’t available everywhere and is often an expensive addition, so check with your insurance representative to see if it is appropriate for you.

  • Mechanical breakdown - Also known as car repair insurance, mechanical breakdown coverage is similar to an extended car warranty. It might be helpful for you if you think you may have trouble paying for car repairs. It doesn’t cover everything and it comes with a deductible, so consider carefully before purchasing this coverage.

  • Pay-Per-Mile coverage - This coverage is a usage-based insurance policy, allowing you to pay for coverage based on the number of miles you drive in a year. Depending on the policy, people who drive 12,000 miles a year or more may not benefit from pay-per-mile insurance.

  • Umbrella Insurance - An umbrella policy is an additional layer of liability insurance that applies once you have met the limits of your current liability coverage. An umbrella policy offers liability coverage for a wider variety of issues, including slander and libel.

  • Custom equipment - Custom equipment insurance provides coverage for custom parts installed in or on your vehicle that might otherwise be excluded from standard comprehensive or collision coverage, like audio equipment or a custom paint job.

  • Accident forgiveness - Many insurance companies offer accident forgiveness coverage, which allows drivers who have a clean driving record to avoid a change in rates due to a single accident.

Is car insurance required?

Yes! Well, financial responsibility is required in some form in every single state. Most states require you to carry bodily injury and property damage liability insurance coverage, but a few states require other coverages instead of (or in addition to) basic liability.

Even the two states that don’t technically require drivers to carry car insurance still require you to provide proof you can meet minimum liability standards. New Hampshire, for instance, doesn’t require car insurance but does require you to prove financial responsibility so they know you can pay for damages in the event of an accident.

Insurance requirements are different in every state, but they are all designed to protect people from being financially harmed in an accident. Car insurance allows people to receive necessary medical care and replace damaged property, helping prevent debt and bankruptcy due to a car accident, which is why some form of liability insurance or other financial responsibility is required in every state. 

→ Learn more about the required amount of car insurance coverage in every state

Average rates by state

The chart below shows the average annual cost of car insurance by state, according to a 2021 report from the National Association of Insurance Commissioners (NAIC). The NAIC’s methodology includes average premiums for PIP coverage into overall liability coverage, but PIP is not necessary (or even available) in every state. Keep in mind that these numbers are averages and your rates may be higher or lower than the ones displayed below based on a variety of factors.

StateAverage PremiumLiabilityCollisionComp
Alabama$1,066.92$511.13$380.51$175.28
Alaska$1,111.07$576.09$387.12$147.87
Arizona$1,181.29$646.75$326.28$208.25
Arkansas$1,097.33$486.72$375.25$235.36
California$1,194.83$616.51$483.60$94.72
Colorado$1,290.34$687.40$330.50$272.44
Connecticut$1,326.09$784.70$407.54$133.86
Delaware$1,393.70$900.32$352.86$140.52
District of Columbia$1,574.09$809.41$535.96$228.71
Florida$1,520.99$1,009.94$361.79$149.26
Georgia$1,382.52$797.80$408.41$176.31
Hawaii$944.70$479.27$357.78$107.66
Idaho$828.32$425.89$262.67$139.75
Illinois$995.55$515.94$339.04$140.57
Indiana$864.82$442.69$286.49$135.63
Iowa$816.18$348.87$252.65$214.65
Kansas$985.34$421.78$287.24$276.33
Kentucky$1,088.73$611.54$312.51$164.68
Louisiana$1,751.37$1,015.36$487.44$248.57
Maine$782.72$374.59$294.80$113.33
Maryland$1,327.40$737.73$422.06$167.61
Massachusetts$1,246.08$658.47$440.55$147.06
Michigan$1,590.35$952.15$479.11$159.08
Minnesota$971.66$499.48$265.74$206.45
Mississippi$1,149.85$538.35$372.17$239.34
Missouri$1,052.86$520.45$315.49$216.92
Montana$1,025.46$435.81$283.65$306.00
Nebraska$962.79$429.35$272.48$260.97
Nevada$1,386.22$900.40$366.54$119.28
New Hampshire$882.65$436.76$327.30$118.58
New Jersey$1,500.58$955.93$414.39$130.26
New Mexico$1,102.15$576.81$311.24$214.10
New York$1,558.66$920.25$457.77$180.64
North Carolina$870.87$391.29$342.13$137.45
North Dakota$844.18$307.97$279.45$256.76
Ohio$881.91$448.59$302.57$130.74
Oklahoma$1,123.61$508.89$346.73$267.99
Oregon$1,077.22$689.74$280.61$106.87
Pennsylvania$1,100.84$555.42$376.21$169.21
Rhode Island$1,500.31$885.33$474.58$140.40
South Carolina$1,227.54$702.37$318.08$207.09
South Dakota$905.02$333.44$244.47$327.11
Tennessee$995.91$477.07$355.01$163.83
Texas$1,372.25$659.47$442.88$269.90
Utah$1,038.50$601.77$309.20$127.53
Vermont$854.27$376.99$329.47$147.81
Virginia$956.98$492.68$316.05$148.25
Washington$1,120.02$689.18$312.65$118.19
West Virginia$1,096.80$521.74$350.20$224.86
Wisconsin$830.06$422.28$247.95$159.82
Wyoming$971.07$356.25$297.61$317.22
U.S. Average$1,189.64$644.11$377.62$167.91

Should I carry liability only coverage?

If the value of your car is low enough, it might make sense for you to have liability only coverage. People with older vehicles who can afford to replace them out-of-pocket might decide it isn’t worth the expense to keep comprehensive and collision insurance, but this isn’t the right choice for everyone.

If you are financing your vehicle or you could not afford to replace it in the event of a total loss, it would be wise to keep full coverage insurance for your vehicle. If you think you might be at a point where it could be a good idea to drop full coverage, make sure to talk to your insurance representative to go over all of your options.

Things to tell your insurance agent

There are many factors that can impact your insurance rates that your insurance agent needs to know. Any of the following could possibly change your rate or earn you a discount, such as:

  • Your marital status

  • If you use your car for both business and personal use

  • Your annual mileage

  • Anyone who is living in your house and may drive your vehicle

  • Anyone who needs to be excluded from your policy

  • Anything that might earn you a discount, such as your occupation (teachers, federal employees, etc.) or group affiliations (veterans, college alumni, etc.)

  • If you lease or finance your vehicle

  • If you own a home or have other insurance policies that can be bundled with your auto coverage

  • If you park your car in a garage

  • If you have any anti-theft devices installed in your car

These things can sometimes impact your insurance rates or even which coverages you need to carry. For example, drivers who park their car in a secure garage instead of on the street have less of a need for comprehensive coverage because their vehicle is protected from weather, falling objects, and theft.

Frequently Asked Questions

What is a minimum car insurance requirement?

Each state has a minimum level of liability coverage drivers need to carry to be compliant with the law. Some states have relatively low minimum levels of liability, while others require drivers to carry a decent amount of coverage. For example, Florida only requires $10,000 in property damage liability and $10,000 in PIP coverage. Illinois, on the other hand, requires drivers to carry 25/50/20 levels of liability along with uninsured motorist coverage of $25,000 per person/$50,000 per accident.

What car insurance coverage do I need?

The type of car insurance coverage you need is specific to your individual situation. You must carry the legal minimums required in your state, but you likely need significantly more insurance coverage than the law requires. Check with your insurance representative to make sure you have enough car insurance, preferably with liability auto insurance limits of 100/300/100 or more.

What deductible should I choose?

Deductibles typically range from $0 to $1,000. The higher your deductible, the lower your insurance rate, so it can be tempting to choose a $1,000 deductible to keep your rates low. But if you can’t afford to pay $1,000 towards your claim any time you have an accident, choosing a higher rate isn’t a good idea. It can be helpful to work with your insurance representative to make sure you choose a deductible that meets your needs.

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