You need at least the coverage your state requires, plus collision and comprehensive if you have a car loan or lease. Beyond that, the right amount depends on what you’d stand to lose: your savings, your home and your income if you cause a serious accident, and your car if it’s damaged or stolen.
Regulators are consistent on one point. The NAIC says you “should consider buying more coverage than the law requires” because crashes happen every day, even to good drivers. For bodily injury liability, the Insurance Information Institute reports that the insurance industry and consumer groups generally recommend at least $100,000 per person and $300,000 per accident.
Key Takeaways
- Your state’s minimum is a legal floor, not a recommendation. Regulators say it’s usually not enough to protect your assets if you cause a serious crash.
- A common starting point for bodily injury liability is 100/300, or $100,000 per person and $300,000 per accident. If you have significant assets, consider higher limits or an umbrella policy.
- Lenders and lessors almost always require collision and comprehensive. On a paid-off car, the key question is whether you could comfortably repair or replace the car yourself.
- Review your coverage at every renewal and after big life changes, like buying a home, adding a teen driver or paying off your car.
A Quick Coverage Checklist
| Coverage | Where to start | When you may want more |
|---|---|---|
| Bodily injury and property damage liability | Your state’s minimum is the floor. Many drivers start at 100/300 for bodily injury. | You own a home, have savings or investments, or have a high income |
| Uninsured and underinsured motorist | Required in 21 jurisdictions and offered in most others | Uninsured drivers are common in your state, or your health coverage has big gaps |
| PIP or medical payments | Required in no-fault states and some others | You have a high health insurance deductible or no disability coverage |
| Collision and comprehensive | Required by most lenders and lessors | You couldn’t afford to repair or replace your car on your own |
| Gap coverage | Optional | You owe more on your loan or lease than the car is worth |
| Umbrella policy | Optional | You have substantial assets to protect from a lawsuit |
Step 1: Know Your State’s Minimum
Every state except New Hampshire requires drivers to carry some auto insurance, and the requirements vary a lot. Pennsylvania’s liability minimum is 15/30/5, Texas requires 30/60/25, and North Carolina requires 50/100/50. Some states also require personal injury protection or uninsured motorist coverage. Our page on car insurance requirements by state lists the minimums for every state, and our guide to what minimum coverage covers explains what those policies leave out.
The minimum keeps you legal. It isn’t designed to cover a serious accident. The Texas Department of Insurance warns that the minimum liability limits “might be too low if you cause a multi-vehicle accident or the other driver’s car is totaled.”
Step 2: Choose Your Liability Limits
Liability coverage pays for injuries and damage you cause to others, and it’s where the biggest financial risk sits. If a judgment or settlement is more than your limits, you owe the difference. The NAIC’s consumer shopping tool says, “You should purchase the most coverage you can reasonably afford to protect your financial security.”
Claim data shows why the minimums can fall short. The Insurance Information Institute, citing ISO data, reports that the average bodily injury liability claim was $28,278 in 2024, more than a $25,000 per-person minimum. That figure excludes Massachusetts and most no-fault states, and averages hide the largest claims.
How high should you go? Some guideposts:
- The Insurance Information Institute reports that the industry and consumer groups “generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.”
- New York’s Department of Financial Services says that if you have assets to protect, you should “seriously consider” higher bodily injury limits, such as $100,000/$300,000, $250,000/$500,000 or more.
- California’s Department of Insurance notes, “In general, the more assets you have, the more you could lose in a lawsuit.”
RateFrog’s guide to liability limits explains what the numbers mean and how split limits work.
Step 3: Decide on Coverage for Your Own Injuries
Uninsured and underinsured motorist coverage protects you when the at-fault driver has no insurance or too little. It’s required in 21 jurisdictions, and most other states require insurers to offer it. Personal injury protection or medical payments coverage pays medical bills regardless of fault, and PIP often covers lost wages too.
How much you need depends on your other protection. If your health plan has a high deductible, or you don’t have disability coverage, these coverages can fill real gaps. RateFrog’s guides to uninsured motorist coverage and PIP insurance explain how each one works.
Step 4: Decide on Collision and Comprehensive
If you have a loan or lease, this decision is usually made for you. The NAIC says that with a loan, you typically must carry comprehensive and collision “until you pay off your loan.” Your contract has the details.
On a paid-off car, the question is whether you could handle a loss yourself. The Insurance Information Institute suggests that if your car is worth less than 10 times the premium for these coverages, buying them “may not be cost effective.” If losing the car would leave you unable to get to work and without savings to replace it, keeping the coverage may still be worth it. RateFrog’s guide to collision vs. comprehensive coverage walks through the trade-offs.
Step 5: Pick Your Deductibles
A higher deductible lowers your premium but raises what you pay after a claim. The Illinois Department of Insurance advises, “Take the highest deductible you can afford.” Choose an amount you could pay tomorrow without trouble. See RateFrog’s guide to how car insurance deductibles work.
Step 6: Consider Gap Coverage and an Umbrella Policy
- Gap coverage. If your car is totaled, your insurer pays its actual cash value, which can be less than your loan balance. The Insurance Information Institute suggests considering gap coverage if you made less than a 20% down payment, financed for 60 months or longer, leased the vehicle or rolled over negative equity from an old loan. See RateFrog’s guide to whether gap insurance is worth it.
- An umbrella policy. It adds liability protection above your auto and homeowners limits. The Insurance Information Institute says most insurers want you to carry at least $250,000 of auto liability before selling a $1 million umbrella policy, though requirements vary.
How the Checklist Might Apply: Three Examples
These hypothetical examples show how the questions above can lead to different answers. They aren’t recommendations for your situation.
| Driver | Situation | Questions to focus on |
|---|---|---|
| A | Rents an apartment, has little savings and drives a paid-off car worth about $3,000 | Whether collision and comprehensive are worth their cost, and whether the state minimum liability leaves too much risk |
| B | Just financed a new car with a small down payment | The lender’s coverage and deductible requirements, and whether gap coverage makes sense |
| C | Owns a home and has retirement savings | Liability limits well above the minimum, and whether an umbrella policy fits |
Review Your Coverage Regularly
The first thing to read when your policy arrives is the declarations page. The NAIC says it’s how you “make sure you have the coverage you wanted to buy.” It lists your coverages, limits and deductibles, while the full policy spells out exclusions and conditions.
Revisit your coverage at renewal and whenever your life changes, such as when you buy a home, add a driver, pay off a loan or move to a new state. For a side-by-side look at the two most common coverage levels, see RateFrog’s guide to minimum vs. full coverage.
Frequently Asked Questions
Is State Minimum Coverage Enough?
It’s enough to drive legally, but regulators say it’s usually not enough to protect your assets. If you cause a serious accident, you could owe anything above your limits.
Do I Need Full Coverage on a Paid-Off Car?
Not legally. It depends on your car’s value and whether you could afford to repair or replace it yourself. “Full coverage” usually means liability plus collision and comprehensive, but it isn’t a standard policy, so check exactly what’s included.
How Much Liability Coverage Do I Need If I Own a Home?
Usually more than the minimum. Regulators note that the more assets you have, the more you could lose in a lawsuit. The 100/300 bodily injury limits that the industry commonly recommends are a starting point, and an umbrella policy can add more protection.
Does More Coverage Always Cost a Lot More?
Not always. The NAIC says most insurers let you buy higher liability limits, “often without much increase in your premium.” Get quotes at a few coverage levels to see the actual difference for you.
Sources
- NAIC: Consumer Shopping Tool for Auto Insurance (PDF)
- NAIC: What You Should Know About Auto Insurance Coverage
- Texas Department of Insurance: Auto Insurance Guide
- California Department of Insurance: Automobile Insurance Guide
- New York Department of Financial Services: Auto Insurance
- Illinois Department of Insurance: Auto Insurance Shopping Guide
- Insurance Information Institute: 8 Auto Insurance Myths
- Insurance Information Institute: How Much Auto Coverage Do I Need?
- Insurance Information Institute: Should I Purchase an Umbrella Liability Policy?
- Insurance Information Institute: What Is Gap Insurance?
- Insurance Information Institute: Nine Ways to Lower Your Auto Insurance Costs
- Insurance Information Institute: Facts and Statistics, Auto Insurance