How much car insurance do I need?

"How much car insurance do I need" has two very different answers. One is the legal minimum your state requires to register and drive a car. The other is the amount that actually protects your savings, your income, and the car itself if something goes wrong. Most drivers who are underinsured are not breaking the law — they are simply carrying the legal floor and assuming it is a plan.

Start with liability, not the minimum

Liability coverage pays for injuries and property damage you cause to other people. State minimums are set low, often representing what a state considers the least a driver can carry, not what a serious crash actually costs. A single hospital stay or a totaled luxury SUV can exceed minimum limits many times over, and the driver at fault is personally responsible for the difference.

A common rule of thumb among agents and consumer advocates is to carry liability limits at least equal to your net worth, including home equity, savings, and other assets a judgment could reach. If that number is modest, 100/300/100 (meaning $100,000 per person and $300,000 per accident for bodily injury, and $100,000 for property damage) is a reasonable target for most drivers who own a home or have meaningful savings to protect.

Uninsured and underinsured motorist coverage

Roughly one in eight drivers on the road carries no insurance at all, according to Insurance Information Institute estimates, and many more carry only the state minimum. Uninsured and underinsured motorist coverage steps in when the at-fault driver cannot pay for your injuries. In many states this coverage is mandatory or must be offered; where it is optional, declining it in writing is usually required. Matching this limit to your liability limit is a common and sensible approach.

Collision and comprehensive: tie it to the car's value

Collision pays to repair or replace your car after a crash, regardless of fault. Comprehensive covers theft, vandalism, weather, animal strikes, and fire. Both carry a separate deductible you choose. Neither is legally required, but a lender or lessor will require both for as long as you have a loan or lease.

Once a car is paid off, the calculation changes. If the car's actual cash value is low relative to your annual premium for collision and comprehensive, self-insuring that risk — dropping the coverage and setting the premium savings aside — can make financial sense. A rough guide many advisors use: if annual premium for physical damage coverage exceeds roughly 10% of the car's value, it is worth running the numbers.

Medical payments and personal injury protection

Medical payments coverage (MedPay) or personal injury protection (PIP), depending on your state, pays medical bills for you and your passengers regardless of fault. In no-fault states, PIP is mandatory and covers a meaningful share of medical and lost-wage costs after an accident. Even where it is optional, it can fill gaps left by health insurance deductibles and copays.

A simple way to size your policy

• List your assets and approximate net worth to set a liability target.
• Match uninsured/underinsured motorist limits to your liability limits.
• Keep collision and comprehensive while you owe money on the car or its value clearly exceeds the deductible plus a few years of premium.
• Add MedPay or confirm your PIP limit if you or your household would struggle to cover a large medical bill out of pocket.
• Review the whole picture whenever your car, loan, or financial situation changes materially.

Once you have a target in mind, it helps to compare how different insurers price the same limits, since identical coverage can vary widely in cost between companies. You can get a free quote to see how your target limits price out before you commit.

For a deeper look at sizing liability limits specifically, see our guide on how much liability coverage you need.