Do I Have Enough Auto Insurance?

How do you know if you're underinsured? Knowing if you have enough auto insurance coverage involves taking a look at your policy and comparing it to your state's minimum liability insurance laws. Your auto insurance policy must meet the minimums required by state law in order to legally be on the road, but that may not be enough auto insurance for your liking. Consider upgrading to a comprehensive auto insurance policy in order to have enough auto insurance to meet your needs.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: May 3, 2021

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Car insurance can be tricky: some people have too much car insurance, while other people don’t have enough insurance. Where do you fit in? Today, we’re helping you decide if you have enough insurance by determining whether you’re under-insured or over-insured.

Are You an Under-Insured Motorist?

Many people drive their vehicles every day knowing they have insurance – but are unaware that they’re under-insured.

Being under-insured means that you legally have enough insurance coverage – but realistically, you don’t have enough insurance coverage for most incidents.

Let’s say you’re the at-fault driver in a collision. The other driver incurs $50,000 in medical bills and $20,000 in property damage. Your insurance policy might have a policy limit of $20,000, which means you’re under-insured for this situation.

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States Require a Minimum Amount of Auto Liability Coverage

Each state in the United States requires drivers to have liability coverage. In order to legally drive on a road in any state, you need to hold liability coverage – and be able to prove it.

Each state has set a minimum limit for the coverage that a driver must purchase. This limit varies widely between states. Some states have a minimum liability coverage that’s sufficient for most incidents. Other states, however, have an unusually low amount of liability coverage.

In any state, drivers may choose to save money on insurance premiums by purchasing the minimum legal amount of insurance. These plans maintain the minimum coverage limits required by the state – but they’re unlikely to cover all possible incidents.

The specific amount of coverage varies widely from state to state. Check out for the latest liability law information in the United States and Canada. It varies from state to state and province to province.

In California, for example, drivers are required to have a minimum coverage of:

  • $15,000 for injury/death to one person
  • $30,000 for injury/death to more than one person
  • $5,000 for damage to property

This would be expressed as $15,000/$30,000/$5,000. Limits vary widely between states.

Are You Under-Insured?

There’s no specific amount of money that separates “well-insured” drivers from “under-insured” drivers. Drivers might be adequately insured for some situations, but under-insured for other situations.

How can you tell if you’re under-insured? Well, if you cause an accident, and the minimum liability coverage limits on your plan cannot pay for all the damage, then you’re under-insured for that situation.

In general, most drivers can consider themselves under-insured if they just meet or exceed the limits mentioned above.

If you are under-insured, then you may have to pay out of pocket for charges that exceed your coverage limits.

Ideally, the collision causes no major medical damage to the other driver or his vehicle. However, that’s not always the case with car accidents. Think of situations like this:

  • The other driver suffers severe, lifelong injuries from the accident requiring serious, lifelong medical treatment and care
  • Multiple passengers in the other vehicle may be injured in the same accident
  • Injuries can cause the other driver and passengers to miss work for an extended period of time
  • The other driver’s vehicle may be significantly damaged or totaled
  • There is additional property damage beyond the other driver’s vehicle

In all of these situations, your basic liability coverage may not be sufficient to cover all damages. In that case, you may want to think about increasing your limits.

Should You Increase Your Limits?

Check your state’s minimum car insurance requirements. Does your policy exceed those requirements? Do you have the bare minimum coverage?

If so, then you may want to consider increasing your coverage. You will pay a higher cost per month – but you can significantly increase your liability limit and give yourself peace of mind.

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What is Underinsured and Uninsured Motorist Coverage?

Car insurance companies offer things like underinsured and uninsured motorist coverage. These policies add to the cost of your insurance, but they can also protect you in the event of a collision.

Uninsured motorist coverage pays for your medical bills and property damage expenses if you’re in a collision where the at-fault party does not carry any automobile liability insurance (which is illegal). In a situation like this, you may choose to sue the uninsured driver. However, people who don’t have liability insurance typically don’t have a lot of assets sitting around – so even if your lawsuit is successful, you might not end up with enough money to cover your medical bills and other expenses.

Underinsured motorist coverage works in a similar way. These policies are activated when the at-fault motorist has liability insurance but doesn’t carry sufficient insurance to cover your losses.


In general, if you have minimum liability insurance, you’re considered an under-insured motorist. You have the minimum legal level of liability coverage – but it’s not enough coverage for many vehicle incidents, especially if multiple people are involved or severe property damage occurs.

Talk to your insurance company to see if increasing your limits is the right choice for you.

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