By 
Nearly every state requires minimum car insurance, but state minimums are almost always too low to protect you financially in a serious accident. The gap between minimum and adequate coverage might be $30 to $60 a month, while the gap in protection can be hundreds of thousands of dollars. Here is how to think through how much you actually need.
Key Takeaways
- State minimums are dangerously low. A serious accident can leave you personally liable above them.
- Aim for at least 100/300/100 liability, and more if you have assets to protect.
- Match collision and comprehensive to your car’s value, and add uninsured motorist coverage.
- Raise your deductible to lower the premium, but only as high as you can comfortably pay.
The Coverage Types and What They Do
Liability (required in most states)
This pays for damage you cause to others in an at-fault accident, split into bodily injury (their medical bills, lost wages, and more) and property damage (their vehicle and property). It is written as three numbers: 25/50/25 means $25,000 per person for injuries, $50,000 per accident, and $25,000 for property damage. State minimums are often just 15/30/10 or 25/50/25, which is dangerously low given today’s medical and repair costs. A practical minimum is 100/300/100, and if you have significant assets like a home or savings, consider 250/500/250, since anything above your limit in a serious accident comes out of your pocket.
Collision
This pays to repair or replace your car after a collision, regardless of fault. Your lender requires it if you have a loan or lease, and it is optional if you own the car outright. Keep it if your car is worth more than about $4,000 to $5,000 and you could not easily replace it. Consider dropping it if your car is worth under about $3,000 to $4,000 and the collision premium exceeds roughly 10% of the car’s value. See our guide on when to drop collision coverage.
Comprehensive
This covers non-collision damage like theft, vandalism, weather, fire, and hitting an animal. It is required with a loan and optional if you own the car, and it is relatively cheap, often around $100 to $300 a year, so it is worth keeping on most cars.
Uninsured and underinsured motorist (UM/UIM)
This covers you when an at-fault driver has no insurance or too little. Around 1 in 7 U.S. drivers is uninsured, and far more in some states, so this inexpensive coverage is worth having on every policy, ideally matching your liability limits.
PIP and MedPay
These cover medical costs for you and your passengers regardless of fault, and are required in no-fault states like Florida, Michigan, and New York. Elsewhere they are optional, and less critical if you have good health insurance, though a useful backup if you have a high-deductible health plan.
The Coverage Levels That Make Sense for Most People
| Coverage | Recommended level |
|---|---|
| Bodily injury liability | 100/300 minimum |
| Property damage liability | $100,000 |
| Collision | Keep if car worth more than ~$3,000 to $4,000 |
| Comprehensive | Yes for most cars |
| UM/UIM | Match your liability limits |
| PIP/MedPay | Required in no-fault states; optional otherwise |
How to Choose Your Deductible
Your deductible is what you pay before insurance covers the rest, and a higher deductible means a lower premium. Common choices are $250, $500, and $1,000. Moving from $250 to $500 often saves roughly $100 to $200 a year, so if you go a few years without a claim, the higher deductible pays off. Choose the highest deductible you could comfortably pay out of savings if you had to.
How Credit Affects Your Premium
In most states, insurers use a credit-based insurance score, and weaker credit can add a meaningful amount to your premium compared with strong credit. California, Hawaii, Massachusetts, and Michigan prohibit using credit for auto pricing. Where it is allowed, improving your credit can lower your rate over time. See our guide on what affects your credit score.
FAQ
Is state minimum car insurance enough?
Usually no. Minimums like 25/50/25 can fall well below the cost of a serious accident, leaving you personally liable for the rest. Aim for at least 100/300/100.
Should I keep collision and comprehensive?
Keep them while your car has meaningful value. On an old, low-value car, the cost can exceed the benefit, so dropping collision may make sense.
Do I need uninsured motorist coverage?
It is strongly recommended, since many drivers are uninsured or underinsured, and the coverage is inexpensive relative to the protection.
Does my credit really affect my car insurance?
In most states, yes. Insurers use a credit-based insurance score, so better credit usually means a lower premium, except in the few states that ban the practice.
Bottom Line
Do not settle for state minimums: carry at least 100/300/100 liability, add uninsured motorist coverage, and match collision and comprehensive to your car’s value. Raise your deductible to trim the premium, and build your credit where it counts. To lower the overall cost, see our guides on cheap car insurance and why car insurance is so expensive.
This article is for educational and informational purposes only and is not insurance advice. Coverage needs depend on your assets, state laws, and risk tolerance, and figures are general estimates. Consult a licensed insurance professional for your situation.
