Updated: 07.30.2026
Car insurance is legally required almost everywhere, but the minimum your state requires and the minimum you actually need are two very different numbers. Carrying only what the law demands is one of those decisions that looks fine until the day it really doesn’t. Here’s how to figure out the right coverage without overpaying for things you don’t need either.
The Coverage Types, What Each One Does
Before deciding how much, understand what you’re actually buying.
Liability insurance covers damage and injuries you cause to other people and their property. If you rear-end someone and injure them, liability pays their medical bills and repairs their car. It does not cover your own injuries or your own car.
Liability limits are expressed as three numbers, for example, 25/50/25:
$25,000 per person for bodily injury
$50,000 per accident for bodily injury
$25,000 for property damage
Collision pays to repair or replace your car after an accident regardless of who caused it, subject to your deductible.
Comprehensive covers damage to your car from non-collision events: theft, vandalism, fire, flooding, hitting an animal, hail, falling objects.
Uninsured/underinsured motorist (UM/UIM) covers your medical expenses and property damage if you’re hit by a driver who has no insurance, or not enough. This is one of the most overlooked and most valuable coverages on this list, more on why below.
Personal injury protection (PIP) covers your medical bills and lost wages after an accident regardless of fault. It’s required in a handful of no-fault states and optional elsewhere.
Medical payments (MedPay) is similar to PIP but narrower, covering medical expenses for you and passengers regardless of fault.
Why State Minimums Aren’t Enough
Every state except New Hampshire requires at least liability insurance, but minimums vary widely and some are genuinely thin. Florida is the clearest example: drivers there are only required to carry $10,000 in personal injury protection and $10,000 in property damage liability, with no bodily injury liability required at all for standard registration. That leaves you personally exposed for medical costs above $10,000 if you cause a serious injury.
One note on Florida specifically, since there’s a lot of inaccurate information circulating about this: there’s been ongoing legislative discussion about repealing Florida’s no-fault PIP system and requiring bodily injury liability instead, and several proposed bills have made headlines. As of now, none of those changes have actually passed into law, the $10,000/$10,000 PIP/PDL minimum is still what’s required. This is genuinely a moving target though, so if you’re in Florida, it’s worth double-checking current requirements at renewal rather than trusting an article, including this one, indefinitely.
Most other states land somewhere around 25/50/25, which sounds adequate until you consider that a single hospital stay can easily exceed $50,000.
The problem with minimum coverage across the board: if you cause an accident that exceeds your policy limits, you personally pay the difference. With a $50,000 bodily injury limit and a serious accident resulting in $150,000 in medical bills, you’re on the hook for the remaining $100,000, out of your own savings, and potentially your future wages if it comes to a judgment.
A good rule of thumb is to supplement your state’s minimum with enough liability coverage to roughly match your net worth. If your assets and future earning potential exceed what your auto and home policies combined can cover, that’s exactly the gap umbrella insurance is built to fill, and it’s often cheaper than people assume.
How Much Coverage You Actually Need
Liability. Go higher than the minimum. Most experts recommend at least 100/300/100:
$100,000 per person bodily injury
$300,000 per accident bodily injury
$100,000 property damage
Full coverage nationally runs roughly $2,200 to $2,900 a year depending on the source and your state, versus roughly $800 to $1,600 a year for minimum liability-only coverage. The jump from bare minimum to solid liability coverage is often just a couple hundred dollars a year, worth it for the protection difference.
Collision and comprehensive. This depends on your car’s value. A rough rule of thumb: if the annual premium for comprehensive and collision combined runs more than about 10% of your car’s actual value, or your car is worth under roughly $4,000-5,000 outright, dropping that coverage and keeping just liability often makes financial sense. Look up your car’s actual cash value first, don’t guess.
If your car is worth more than that, keep both, and choose the highest deductible you could comfortably pay out of pocket. Going from a $500 to a $1,000 deductible can save $200-300 a year in premiums.
Uninsured motorist. Always worth having, and here’s why it matters more than most people realize: roughly one in three drivers nationally are either completely uninsured or carry so little liability coverage that it wouldn’t fully pay for a serious accident. That’s not a fringe risk, it’s a coin flip in some states. Match your UM limits to your liability limits rather than treating this as an afterthought.
PIP or MedPay. Check your health insurance first. If you have solid health coverage, PIP and MedPay overlap with what you already have. If your health insurance has high deductibles or real gaps, PIP adds a meaningful layer of protection worth the extra cost.
What Affects Your Premium
Your driving history, age, location, credit score in most states, the vehicle you drive, and your annual mileage all affect your rate. Newer vehicles and vehicles in areas with higher theft or natural disaster risk cost more to insure.
A few things you can actually control:
Raising your deductible lowers your premium, but only raise it to an amount you could genuinely pay if you needed to. Bundling auto with homeowners or renters insurance through the same insurer typically saves 10-25%. Adding multiple cars to one policy at the same address usually saves a similar amount. Low annual mileage, if you work from home or drive rarely, can unlock a meaningful discount. And shopping at renewal matters, loyalty rarely pays in insurance, since rates tend to creep up quietly the longer you stay without comparing. I go deeper on all of these, plus the credit-score factor most people don’t know about, in How to Save Money on Car Insurance Without Losing Coverage.
The Right Coverage for Most People
For a standard driver with a car worth $15,000 or more and some assets to protect:
Liability at 100/300/100. Collision and comprehensive, with a $500-1,000 deductible. Uninsured motorist matching your liability limits. PIP or MedPay, optional if you already have solid health insurance.
For an older car worth under roughly $5,000:
Liability at 100/300/100 still. Consider dropping collision and comprehensive. Keep uninsured motorist regardless, that one’s not about your car’s value.
When you’re ready to compare actual quotes, Policygenius lets you see rates from multiple insurers side by side, since rates for identical coverage can vary meaningfully between companies.
Frequently Asked Questions
Rarely. State minimums are set low enough that a single serious accident can easily exceed them, leaving you personally responsible for the difference. Most experts recommend at least 100/300/100 in liability regardless of your state’s minimum.
According to the Insurance Research Council, about 15.4% of drivers are fully uninsured, and another 18% are underinsured, meaning their coverage wouldn’t fully pay for a serious accident. Combined, roughly one in three drivers can’t fully cover you if they’re at fault.
Not for standard vehicle registration, as of now. Florida requires $10,000 in personal injury protection and $10,000 in property damage liability. There has been ongoing legislative discussion about changing this, but no such change has passed into law, so it’s worth verifying current requirements directly since this is an active topic.
Generally when the annual premium for both combined exceeds about 10% of your car’s actual value, or when the car itself is worth roughly $5,000 or less. Below that point, you’re often paying more for the coverage than the payout would be worth.
That gap is exactly what umbrella insurance is designed to fill. It sits on top of your existing auto and home liability limits and is often more affordable than people expect for the amount of extra protection it provides.
Sources
Uninsured and underinsured motorist rates (2023 data): Insurance Research Council
Florida PIP requirements, current status: Kris Torres Injury Law
Average car insurance costs 2026: Insurify, Experian
Related: The Insurance You Actually Need – and What’s a Waste of Money