How much car insurance do I need?

Why state minimums aren't enough

State minimum coverage exists to satisfy the legal requirement to drive — not to protect you financially. A typical state minimum (25/50/25, i.e., $25,000 per person bodily injury / $50,000 per accident / $25,000 property damage) leaves you personally liable for any damages above those limits. One ER visit, one new SUV, one jury award — any of them can blow past those numbers by 5 to 20 times, and the difference comes out of your savings and your house.

Three rules:

1. Bodily injury and property damage liability should match your net worth. If you have $250,000 in assets between savings and home equity, you need at least 250/500/100 liability — otherwise a single at-fault accident can wipe you out.
2. Add comprehensive + collision if your vehicle is worth more than $5,000-$10,000. Below that threshold, the annual premium starts to eat into the vehicle's value and self-insuring makes sense. Above it, the premiums cost less than the $25,000 check you'd have to write yourself after a total loss.
3. Lenders and lessors require comp + collision. If your vehicle is financed or leased, you have no choice — the loan agreement mandates physical damage coverage. Leases additionally require gap coverage (most leases include it; check yours).

How the three liability numbers actually work

Liability is written as three numbers, like 100/300/100. The first is the most your insurer pays for bodily injury to any one person in an accident you cause. The second is the cap for all bodily injuries in that single accident, no matter how many people are hurt. The third is property damage — the other car, the storefront you drove into, the fence, the light pole. Each number is in thousands of dollars, so 100/300/100 means $100,000 per person, $300,000 per accident, $100,000 for property.

People fixate on the first number and ignore the second, which is a mistake. Picture a minivan with four passengers. If you carry 100/300, each of the four can recover up to $100,000, but the total stops at $300,000 — so a carload of seriously hurt people can exhaust the per-accident cap fast, and the overflow lands on you. Raising the per-accident figure is usually cheap relative to how much exposure it removes, which is why the calculator above pairs a per-accident limit at twice the per-person limit and nudges both up with your net worth.

The property-damage number is the one most drivers set too low and never think about again. The average new vehicle now sells for well over $45,000, and a loaded pickup or three-row SUV clears $70,000 before options. A $25,000 property-damage limit was reasonable when the average car cost half what it does today. Total someone's new truck with a $25,000 limit and you write a personal check for the gap. The calculator sets property damage as a fraction of your bodily-injury limit so it scales with the rest of your coverage instead of sitting frozen at a state floor.

Why state minimums aren't enough, in dollars

Run the numbers on a routine multi-car pileup. A driver rear-ends two stopped cars at a light, both occupants go to the ER, one needs surgery and physical therapy, and one of the cars is a near-new crossover that gets totaled. Medical bills land near $140,000 combined; the totaled crossover is $38,000. Against a 25/50/25 minimum, the insurer pays $50,000 toward injuries and $25,000 toward the crossover. The driver personally owes roughly $90,000 in injury overflow plus $13,000 in property overflow. That is the difference between a covered loss and a six-figure judgment that follows you through wage garnishment and a lien on the house.

This is the core reason to match liability to net worth rather than to the law. The state sets the floor a driver needs to be allowed on the road. It says nothing about the size of the lawsuit a plaintiff's attorney will file, and a plaintiff's attorney files for the policy limit plus whatever assets show up in a judgment search. If you own a paid-off home, a retirement account, and a few years of savings, the minimum policy is protecting the insurer's wallet, not yours.

When comprehensive and collision earn their keep

Comp and collision are property coverage for your own car, and the math is straightforward. Collision pays when you hit something; comprehensive pays for the non-collision events — theft, hail, a deer, a tree branch, a flood, a shattered windshield. Together they cost somewhere between $300 and $900 a year for most drivers, and the payout is capped at the car's actual cash value minus your deductible.

That cap is the whole decision. On a car worth $30,000, paying $600 a year to protect a potential $30,000 loss is sensible insurance. On a car worth $3,500, paying $600 a year to protect a $3,500 loss is a bad trade — in five or six years of premiums you have paid for the car again, and the insurer still only owes you $3,500 minus the deductible if it's totaled. Somewhere between those two points the coverage stops being worth it, and that crossover usually sits in the $4,000 to $6,000 range. The calculator flags vehicles above roughly $10,000 as a clear yes, vehicles between $5,000 and $10,000 as a judgment call, and vehicles below that as candidates to drop the coverage and self-insure from savings.

The judgment call hinges on one question: could you replace the car out of pocket tomorrow without it hurting? If yes, dropping comp and collision on a low-value car and banking the premium is rational. If a $5,000 surprise would force you into a loan, keep the coverage even on the older car. Self-insuring only works when you actually have the reserve to self-insure.

Financed and leased cars take the choice away

If there is a lender or a lessor on the title, the comp-and-collision decision is already made for you. The loan or lease contract requires physical-damage coverage because the car is the lender's collateral, and most agreements specify a maximum deductible too. Let the coverage lapse and the lender can buy force-placed insurance on your behalf and add it to your balance — expensive, bare-bones coverage that protects them and not you.

Financed and leased cars also raise the gap question. Gap coverage pays the difference between what you owe and what the car is worth if it's totaled, and that difference is real in the first few years of a loan when the balance outruns the depreciating value. A new car can be $6,000 to $10,000 underwater the day after purchase. Without gap, a total loss in year one means the insurer pays the car's depreciated value, the loan still wants its full balance, and you cover the shortfall on a car you no longer have. Most leases bundle gap automatically; many loans don't, so check before you assume you're covered.

State no-fault rules add a layer

Twelve states require Personal Injury Protection (PIP): FL, HI, KS, KY, MA, MI, MN, NJ, NY, ND, PA, UT. PIP covers medical expenses regardless of fault, and minimums vary from $3,000 (NY) to $50,000+ (NJ optional). The calculator above adjusts for these where they apply. PIP matters most for drivers without strong health insurance, because it pays your own medical bills immediately after a crash without waiting to assign blame. If you already carry good health coverage, you can often run PIP at the state minimum and put the savings toward higher liability limits, where the catastrophic risk actually lives.

Uninsured/underinsured motorist (UM/UIM) coverage is mandatory in 21 states and Washington, D.C., and recommended everywhere else. It protects you when the at-fault driver has no insurance or insufficient limits — common in states with low minimums or high uninsured rates (FL, MS, MI, TN). About one in seven drivers nationally carries no insurance at all, and the share runs higher in states with weak enforcement, so the at-fault driver who hits you may simply have nothing to collect against. UM steps in where their liability coverage should have been. Carry UM/UIM at the same limits as your liability, because a serious injury caused by an uninsured driver is exactly as expensive as one caused by an insured driver — the bills don't shrink because the other person didn't buy coverage.

The underinsured half of UM/UIM is the part people forget. Plenty of drivers carry only their state's minimum, so when one of them causes $200,000 in injuries with a $25,000 policy, UIM covers the $175,000 gap up to your own UIM limit. That is why matching UM/UIM to your liability limits, rather than to the state floor, is the move that actually protects you — your own policy becomes the backstop for everyone else's thin coverage.

How to use the result

Treat the recommendation above as a starting target, not a verdict. Take the coverage levels to three or more carriers and ask for an identical quote at each — same limits, same deductibles, same drivers and vehicles — because premiums for the exact same coverage routinely vary 30 to 50 percent between insurers. Bundling with a homeowner's or renter's policy, raising deductibles you can comfortably afford, and asking about every available discount usually buys back enough premium to fund the higher liability limits that matter. The goal is not the cheapest policy on the lot; it's the most coverage your budget will carry, structured so a single bad accident can't reach your savings or your home.

For state-specific minimums, see car insurance minimums by state. For shopping price after you know what coverage to buy, see cheapest car insurance by state. For special situations: SR-22 after a DUI or major violation, non-owner policy, teen drivers, and GAP insurance for leased/financed vehicles.