How Much Car Insurance Do I Need?

While minimum coverage car insurance with bodily injury and property damage liability coverage averages $65 per month, most drivers should get more coverage than their state requires.

Drivers of newer vehicles should also consider collision and comprehensive coverage, which will protect their vehicle in almost any situation.

How much car insurance do I need?

A 25/50/25 policy is the cheapest amount of coverage we recommend for drivers looking for the cheapest car insurance, but it may not be enough protection in a serious accident.

While the minimum amount of car insurance required by each state varies, it is recommended that you obtain as much car insurance as you can afford.

Types of car insurance coverage

Bodily injury (BI) liability

How much BI coverage do you need?

While bodily injury coverage requirements vary by state, all states except Florida require at least $25,000 in bodily injury coverage per accident.

Having only the bare minimum of coverage may save you money on car insurance, but it may cost you in the long run. Purchasing as much bodily injury coverage as you can afford may save you from having to pay for costly medical bills out of pocket.

If you cause a serious car accident and another driver or passengers require expensive medical care that exceeds what your insurance covers, they may sue you to make you pay for their medical expenses out of pocket. If you have a large number of financial assets, such as a home, you may be forced to sell them to pay off the lawsuit.

What does bodily injury liability cover?

Medical care, emergency services, lost income, and even funeral expenses are covered by bodily injury liability insurance. Payouts for bodily injury liability claims can vary greatly depending on factors such as the severity of the injury.

Inpatient care can cost thousands of dollars per day in a hospital. That is why, if you can afford it, increasing your bodily injury limits is a good idea.

Property damage (PD) liability

How much do you need?

Every state requires property damage liability, with minimum property damage limits ranging from $5,000 to $25,000 per accident.

While most minimum requirements are sufficient to cover average accident costs, you can always increase your coverage for a minor rate increase. This would protect you in the worst-case scenario, such as colliding with a museum or totaling someone else's expensive sports car.

What does property damage liability cover?

Property damage liability covers damage to other people's property caused by a car accident, such as damage to homes, stores, vehicles, landscaping, or other objects. It does not cover damage to your own car or property, such as if you crash into your own garage.

Personal injury protection (PIP)

How much do you need?

PIP insurance is required in 16 states. The minimum PIP requirement varies by state, ranging from $2,000 per person in Maine to $250,000 in Michigan.

You can choose not to have personal injury protection (PIP) or medical payments coverage (MedPay) if your state does not require it. If your health insurance plan has a high deductible or does not cover car accidents, you may want to consider PIP or MedPay.

What does personal injury protection cover?

In the event of an accident, personal injury protection (PIP) pays for any medical expenses or rehabilitation costs. If you are driving, PIP protects you and your passengers, but it also protects you if you are riding in another car or if you are hit as a pedestrian.

While PIP and bodily injury liability coverage are similar, the main difference is that PIP covers medical bills for you and your passengers, whereas bodily injury liability covers injuries to other drivers and passengers in the event of an accident caused by you.

Collision and comprehensive coverage

How much do you need?

While collision and comprehensive coverage are not required by state law, anyone purchasing a new or used car from a dealership with a car loan or lease will almost certainly be required to purchase this coverage before leaving the lot.

The cost of collision and comprehensive insurance will vary depending on your vehicle, driving history, and deductible. A policy with full coverage, including collision and comprehensive coverage, costs roughly twice as much as one with only minimum liability coverage.

If the cost of replacing your car is four to six times the annual cost of comprehensive and collision insurance, it's usually worth dropping both collision and comprehensive coverage. This generally means that if your car is between 8 and 12 years old and worth between $5,000 and $10,000, you can consider dropping full coverage.

What do collision and comprehensive cover?

Collision and comprehensive coverage pay for physical damage to your vehicle, such as replacement parts, repainting, or a replacement vehicle if your vehicle is lost, stolen, or totaled.

Collision coverage protects your vehicle from damage caused by accidents that are beyond the driver's control, such as car crashes, fender benders, or backing into another car in the parking lot. Comprehensive coverage, on the other hand, covers accidents that do not involve other vehicles, such as colliding with a deer or having a tree branch fall on your car.

Uninsured/underinsured motorist coverage

How much do you need?

Uninsured/underinsured motorist coverage is mandated in 22 states and is typically less expensive than other types of coverage.

Most states require uninsured/underinsured motorist coverage with limits equal to your bodily injury and property damage limits.

What does uninsured/underinsured motorist coverage cover?

Uninsured/underinsured motorist coverage pays for your car repairs and/or medical bills if you are hit by an at-fault driver who has no insurance or only enough insurance to cover the damage caused by an accident.

Uninsured/underinsured motorist insurance comes in two varieties: bodily injury (UIM BI) coverage, which covers your medical bills and recovery costs, and property damage (UIM PD), which pays for damage to your car or home.