How much auto insurance coverage do I need?

Did you know that auto insurance requirements by state vary? Although liability is required for most states, liability auto insurance has different coverages in some neighboring states.

If you’ve recently wondered, “How much car insurance coverage do I need?” don’t worry — we’re here to help.

Our guide explains how much insurance you need and how to compare auto insurance quotes.

Continue reading to learn about the amount of insurance you need. If you’re ready to start comparing quotes from multiple insurance companies, use our free online quote tool above to begin.

How Much Auto Insurance Coverage You Will Need

Drivers across the nation often ask, “How much insurance do I need?” The minimum auto insurance coverage that you have to sign up for depends on where you live. Also, the coverage you need is based on specific situations.

For example, people who still make payments on their car need full coverage car insurance. But drivers who own their vehicle only need liability coverage.

Liability insurance usually includes property damage and bodily injury liability. However, some states include uninsured/underinsured motorist (UM/UIM) coverage, personal injury protection (PIP) insurance, and medical payments (MedPay) coverage.

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• Does my car insurance cover damage caused by a natural disaster if I only have liability coverage?

The Minimum Auto Insurance Requirements for Each State

Bodily injury and property damage liability insurance pay for damage and injuries to other drivers.

Some states have UM/UIM coverage and PIP attached to their requirements. UM/UIM and PIP are designed to help you (the policyholder).

Let’s examine what drivers need in each state.

Liability Auto Insurance Minimum Coverage Requirements by State

If you have BI liability, PD liability, UM/UIM coverage, and PIP attached to your liability insurance requirements, you won’t have to pay extra for UM/UIM and PIP.

When UM/UIM, PIP, or MedPay are optional, it costs more to add them to your car insurance policy.

New Hampshire and Virginia don’t have mandatory auto insurance requirements. However, anyone who purchases car insurance in those states must meet specific conditions.

Read more:

• Cheap West Virginia Auto Insurance
• Cheap Delaware Auto Insurance
• Cheap Vermont Auto Insurance
• Cheap Wyoming Auto Insurance

Coverage Levels

Coverage levels determine your policy limits. Most minimum coverage requires 25/50/25 for BI and PD liability.

But what does that mean? The 25/50/25 limit translates to this:

• $25,000 for bodily injury of one person per accident
• $50,000 for bodily injury of multiple people per accident
• $25,000 for property damage

UM/UIM coverage shares the same traits as BI and PD liability, but the coverage is for you. PIP has a $10,000 limit, and MedPay has a $5,000 limit.

Raising your coverage level provides a higher coverage amount. Most auto insurance companies recommend that you obtain the medium or high coverage levels, which are 50/100/50 and 100/300/100, respectively.

Acquiring higher coverage limits increases your auto insurance rates.

Liability Auto Insurance Rates

Liability car insurance is the coverage that you need to drive legally in most areas of the United States. But auto insurance varies for each state. So how much does insurance cost?

Let’s examine the cost of minimum coverage auto insurance for all states based on research from the National Association of Insurance Commissioners (NAIC).

Average Monthly Liability Auto Insurance Rates

Do you see how car insurance rates change for each state? It’s similar to the minimum coverage requirements.

But your rates may look different once you receive auto insurance quotes from companies in your area.

Companies With the Cheapest Liability Auto Insurance Rates

Liability car insurance doesn’t always consider the average cost after obtaining a quote. But you can get affordable auto insurance if you shop with the right company.

Here is a list of the best auto insurance companies and their average liability-only rates.

Average Monthly Liability-Only Auto Insurance Rates by Company

Some of these companies are regional, and you may have to shop with either a local insurance company or a national insurance company.

State Farm, Geico, and Nationwide are some of the top car insurance companies in the United States.

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How Much Insurance Coverage You Will Need for a Financed Vehicle

If you still make payments on your car, you’ll need full coverage auto insurance. Full coverage insurance is approximately 53% more expensive than liability insurance.

According to the NAIC, full coverage car insurance costs $90 per month on average. But full coverage rates vary at the best insurance companies across the nation.

Let’s examine the rates below.

Full Coverage vs. Liability-Only Insurance: Monthly Auto Insurance Rates by Company

Geico, American Family, Nationwide, and State Farm are the most affordable insurance companies in America. The cheapest companies offer liability-only rates close to the $48 average.

But full coverage insurance is significantly more expensive than average. However, you can save hundreds of dollars per year when you qualify for auto insurance discounts.

If you have full coverage, you can raise your auto insurance deductible to save even more.

Read more:

• Does my auto insurance cover damage caused by an uninsured driver if I have collision coverage?
• Does my auto insurance cover damage caused by a road hazard? 
• Does my auto insurance cover damage caused by a tornado or other windstorm? 
• Does my auto insurance cover damage caused by a water main break? 
• Does my auto insurance cover damage caused by a wildfire?
• Does my auto insurance cover damage caused by an earthquake?
• Does my auto insurance cover damage caused by a brake failure?
• Does my auto insurance cover damage caused by a hailstorm or heavy rain?
• Does my auto insurance cover damage caused by a landslide or mudslide?
• When is an auto insurance deductible waived?

GAP Insurance Requirements

Vehicle GAP insurance is not required, but it’s highly recommended. GAP insurance pays for the total balance of your vehicle after a total loss accident.

For example, if a total loss incident exceeds your policy limit, GAP insurance covers what you owe the lender or the dealership.

Read more:

• Does auto insurance cover accidents while drifting? 
• Does my auto insurance cover damage caused by a runaway vehicle?

Determining Your Ideal Auto Insurance Coverage: The Bottom Line

Your car insurance requirements depend on where you reside. Although some states have similar coverage requirements, auto insurance rates vary.

Also, your needs are different. Therefore, your insurance quotes won’t be the same as someone living in the same state.

Now that you know how much insurance coverage you need, enter your ZIP code into the free online quote tool below to compare multiple insurance companies near you. (For more information, read our “How can I find auto insurance for a vintage or custom car?“).