How Much Car Insurance Do You Need?

 Your state may require a certain amount of coverage, but it's not always enough By CHUCK TANNERT Updated March 19, 2024 Reviewed by ERIC ESTEVEZ Fact checked by BETSY PETRICK Betsy Petrick Fact checked by Betsy Petrick Full Bio Betsy began her career in international finance and it has since grown into a comprehensive approach to journalism as she's been able to tap into that experience along with her time spent in academia and professional services. Learn about our editorial policies Part of the Series Guide to Car Insurance 6 Strategies to Protect Income From Taxes

 CLOSE How much car insurance you need depends on several factors, including where you live, how much your car is worth, and what other assets you need to protect. Here's what you need to know. KEY TAKEAWAYS Most states require you to have at least a minimum amount of insurance coverage for any injuries or property damage you cause in an accident. Collision coverage, which is optional, covers damage to your own car in an accident. Comprehensive coverage, also optional, protects against other risks, such as theft or fire. Uninsured motorist coverage, mandatory in some states, protects you if

 you're hit by a driver who doesn't have insurance. How Car Insurance Works An automobile insurance policy is actually a package of several different types of insurance. The most common ones are: Bodily injury liability Property damage liability Medical payments or personal injury protection Collision

 coverage Comprehensive coverage Uninsured/underinsured motorist coverage Depending on the state you live in, some of these coverages may be mandatory, others optional. If you have an auto loan or

 lease, your lender may also have certain requirements. But beyond what your state or lender requires, you may want to purchase additional insurance to protect yourself. Here's a closer look at each type of coverage and how to decide how much you really need. Bodily Injury Liability What it covers: Bodily injury liability is the part of a car insurance policy that will pay for injuries you or family members who are listed on your policy cause to someone else in an auto accident. How much you need: Virtually

 every state requires drivers to purchase bodily injury liability coverage, although the amount varies from state to state. On an auto insurance policy, your liability coverage is typically expressed as a series of three numbers, such as 25/50/20. The first number represents the maximum your insurer will pay per person if you injure someone in an accident—$25,000 in this example. The second number is the

 maximum it will pay per accident, in case more than one person is injured—$50,000 in this case. The third number refers to property damage liability. You will need to purchase at least the minimum amount of bodily injury coverage that your state requires. For many states, that's $25,000 per person and $50,000 per accident, although some states are lower or higher.1 Your state's minimum

 requirements might not be enough, however, especially if you are involved in a serious accident. You'll need to consider your assets and whether they'd be adequately protected in the event of a lawsuit. For example, if you own your home or have a substantial amount of money in savings, a costly accident could put them at risk. In that case, you'll want to buy more coverage. The nonprofit Consumers' Checkbook, among others, recommends buying coverage of at least 100/300/50, just in case. The

 difference in cost between that coverage and your state's minimum will probably not be very much.2 You can buy even more coverage than that—250/500/100, say—if you have more assets to protect. You can also purchase an umbrella policy, which will raise both your auto and home insurance liability coverage to $1 million or more. Property Damage Liability What it covers: Property damage liability covers the cost when you or members of your family damage another person's car or other property

 (such as a tree or fence) in an accident. How much you need: As with bodily injury liability, virtually every state requires you to have some amount of property damage coverage. It's represented on your policy as the third number in that sequence, so a 25/50/20 policy would provide $20,000 in coverage. Some states require you to have as little as $10,000 or even $5,000 in property damage liability coverage, but $20,000 or $25,000 minimums are most common.3 Again, you may want to buy more

 coverage than your state's minimum. But unless you find yourself in a collision with a Lamborghini or Rolls-Royce, you probably don't face as much financial risk as you would in an accident in which people are seriously injured. A commonly recommended level of property damage coverage is $50,000—or more if you have substantial assets to protect. Medical Payments (MedPay) or Personal Injury Protection (PIP) What it covers: Unlike bodily injury liability coverage, medical payments (MedPay)

 or personal injury protection (PIP) covers the cost of injuries to the driver and any passengers in your car. In some cases, it will also cover any lost wages resulting from injuries sustained in an accident.4 How much you need: Whether medical payments or PIP coverage is mandatory, optional, or even available will depend on your state. In states with no-fault insurance laws, such as Florida and New

 York, PIP coverage is mandatory. In Florida, for example, drivers must carry at least $10,000.5 In New York, the minimum is $50,000.6 If you and your family members already have good health insurance, you may not need to buy more than the required minimum of PIP coverage. If you don't have health insurance, however, you might want to purchase more.7 That's especially true in a state like Florida,

 where $10,000 in coverage could be inadequate if you're in a serious accident.5 Collision Coverage What it covers: Collision coverage will pay to repair or replace your car if you're involved in an accident with another car or hit some other object. How much you need: States don't require drivers to have collision coverage. However, if you have an auto loan or are leasing, your lender may require it. When you've paid off your loan or returned your leased car, you can drop the coverage. Even if it's not required, you may want to buy collision coverage. For example, if you'd have trouble paying a big repair bill out