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How much car insurance should you buy?



See recommended coverage levels for drivers like you.

How much car insurance should you buy?

There are two correct answers:

First, you need enough insurance to drive legally. Find out your state car insurance minimum requirements.

Second, you need enough car insurance to protect your life from turning into a living hell if you have a car accident. That can be as easy as buying the minimum coverage. Or it can be much more complicated.

We'll walk you through our guide on figuring this out.

Who should buy minimum levels of liability car insurance?

  • Minimum liability is rarely advisable, but if you can't afford more, it's better than no insurance.
  • If you have no savings or assets, minimum liability coverage may suffice.

In most states the minimum liability required by your state is not enough to pay for serious injuries or to replace a newer car. It is only enough to drive legally.

If you own only the clothes on your back and a very old car, you can get by with just the minimum levels of liability mandated by your state. That’s because you're probably what is known as "judgment-proof." You may lose if someone decides to take you to court to pay for an accident you cause, but you have no real assets to take.

If you have savings or a home or even expensive jewelry and valuable collectibles, you are not judgment-proof. And you need more coverage.

To help you decide how much liability insurance you need, we've created three liability insurance levels as a rough guide. Levels of coverage offered will vary by state and by insurer. Liability insurance will not repair your own car.

In the levels below:

  • The first two numbers refer to bodily injury liability, which pays the hospital bills of anyone you injure.
  • The first number is the per-person limit.
  • The second is the per-accident limit.
  • The third number is the property damage liability limit, which would repair or replace the car of anyone you hit.

50/100/50: This level of coverage is recommended for those who have an older car, few assets, don’t drive much and are on a tight budget, for instance college students and retirees who are downsizing.

100/300/100: This is the level most financial experts say is appropriate for middle-income earners with a typical level of savings, adequate in most circumstances. The cost of liability insurance, once you have bought the basic levels, does not increase exponentially. Moving to 100/300/100 will not cost twice as much as 50/100/50. In an analysis of rates, CarInsurance.com found that it costs just $96 more a year, on average.

250/500/100: If you own an expensive home or have saved diligently, you may be worth millions even though you do not consider yourself rich. We would suggest supplementing even this high level of coverage with an umbrella liability policy that extends your protection by $1 million or more. It’s relatively cheap.

Who should buy uninsured motorist car insurance?

  • If you have your own health insurance and you have purchased collision coverage, you may be able to skip uninsured motorist coverages if your state allows.
  • It is a good idea to keep uninsured motorist coverages if you can afford to, because they can minimize your financial losses from deductibles and coverage caps.

Your state may require that you buy uninsured motorist bodily injury coverage, which pays your hospital bills if you are hit by an uninsured driver. Your state may require only that you be offered this coverage but allow you to turn it down.

If you buy this coverage, it typically will come in the same amounts as your own liability coverage. 

Uninsured motorist coverage costs an average of $83 a year, according to a CarInsurance rates analysis.

A few states also require uninsured motorist property damage, which usually pays for some -- but not all -- of the damage to your own car. It doesn’t cover hit-and-run accidents in most states, though.

Do you need comprehensive and collision coverage? 

  • Yes, if your car is less than 10 years old.
  • Yes, if you can't afford to repair or replace your car.
  • Yes, if you live in an area prone to flooding, hail, tornadoes or animal strikes.

Comprehensive insurance pays for damage to your car from severe weather, fire, collisions with animals and theft. Collisions pays to repair your car if you cause an accident.

This is where car insurance for a 10 year old car comes into play. If your car is less than 10 years old, you should consider buying comprehensive and collision coverage. You should also carry comprehensive and collision insurance if your car is 10 years old or older, but worth more than $3,000, or if you can’t afford to repair or replace it.

If you owe money on your car, your lender requires you to have collision and comprehensive coverage, which would repair or replace your car. Liability insurance pays only for others’ cars.

You must choose a deductible amount for collision and comprehensive coverages. Damage below this amount is your responsibility to fix.

We recommend that you keep deductibles low while you are still making payments on a car. Once the car is paid off, build an emergency fund and raise your deductible to match it.

Comprehensive costs an average of $172 a year, collision costs an average of $488 annually, according to CarInsurance.com’s rate analysis.

Do you need medical payments or personal injury protection?

  • Yes, if you don't have health insurance.
  • Yes, if you can't afford or don't have the savings to live without a loss of income due to injury.

Your state, especially if it is a no-fault state, may require that you buy personal injury protection so that your injuries in a car accident are always covered up to your limits, no matter whose fault the accident was. It usually includes coverage for lost wages as well.

Medical payments coverage is required by a few states but is optional in most, paying medical expenses up to your limits.  If you don’t have your own health insurance coverage, you should consider this coverage. If you have a high-deductible health plan, medical payments may help pay the deductible. 

Personal injury protection costs an average of $198 yearly. Medical payments costs an average of $22 a year, according to CarInsurance.com’s rate analysis.

How should you save money on car insurance?

In order of impact and potential savings, we suggest the following steps for drivers trying to save money on their car insurance bills:

  • Shop around. You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.
  • Look for car insurance discounts.  
  • Consider a named driver exclusion if a member of your household has a high-risk driver history.
  • Raise your deductibles.
  • Drop collision and comprehensive coverage altogether if you own your car outright.
  • Drop other optional coverages such as uninsured motorist or medical payments.
  • Reduce the amount of liability coverage you are buying.

If you know what coverage you want to buy, start comparing quotes from multiple insurance companies.


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15 Responses to "How much car insurance should you buy?"

    If you have a decent job and own anything, get 100/300/100 coverage on your auto. It's not that much difference in price and totally worth it, especially if you have a young driver in your house.

  2. Jessy Shaw

    Getting auto insurance for the first time, and even the third time, can be a little intimidating. You want to be able to have the best coverage possible for what you can afford. It is always a good idea to weigh out your options and make sure you know what's out there before making any sort of commitment. That way, you know that you are getting the best coverage possible.

  3. Nick Mallory

    Thanks for the advice. I used to be a "judgement proof" person while I was in college, but after I graduated I moved purchased something that was more like the 50/100/50 that you mentioned. I think now that I'm married and growing a family, I want something even better than that. Like you said, additional coverage often isn't that much more expensive.

  4. Rose Bronson

    Thanks for the info. It was very helpful! I was told to keep raising it and I have but I wasn't sure just how much I truly needed.

  5. Car Insurance

    The best auto insurance should provide flexible policy options, a smooth claims experience and helpful representatives. If you really love your car, you want to make sure you have all the types of coverage that are available.

  6. Tina

    I am very interested in all this information. I really need to change insurance companies.

  7. Average Net Auto Insurance

    I always wondered what the average auto insurance rates were. Thanks for the awesome share!

  8. Mike jacy

    If the states require some car insurance ,then how come the law lets people drive without the insurance? When I purchased my license plate stickers in Illinois you had to have car insurance to get the sticker. My father-in-law was killed by an uninsured driver and got away without any penalty or settlement from the court.

  9. CheapestCar InsuranceQuotein San Jose

    Great article with great information. Keep it up.

  10. Money Saving Auto Insurance San Jose CA

    I really like this website. Thanks a lot for sharing this information.

  11. Trailblazinlace

    Although everyone has their own opinion about too much or not enough asset protection on your auto limits coverage, there is one fact that needs to be realized or educated in most states (most insureds) is that even though you may be proven "judgement proof" your are NOT exempt from wage garnishments. Most states allow up to 25% of your earnings (SSI, welfare,or pensions are protected) to be garnished in the event of a fatal vehicle accident the insurance limit runs out. Any additional the lawyers get approved for settlement comes out of your earned wages for; however, many years it takes to pay in full. And so when your driving behind that wheel you are risking your future wages if you are not covered properly. In other words, if you hold a job with income being reported, it can be garnished.

  12. Chris

    You should always have uninsured/underinsured motorist coverage. Medical insurance has co-payments and medical insurance will want their money back from the bodily injury liability. Look up the ERISA. Also, please remember all those people out there that do not follow the law and drive without insurance.

  13. Jane

    You can, and should drop comp and collision, if it costs too much. I dropped comp and collision off my 12-year-old car and saved the money I would have paid in comp and collision premiums to put towards a new car -- and I live in Florida. If a car isn't worth much, don't pay premiums that are more than the the value the insurer would pay out.

  14. Michael

    No one should drop comp or collision in Florida. That would be nuts.

  15. Michael

    How can this article suggest if you own your car outright to drop comprehensive or collision. This is a really bad idea. Living where there are hurricanes and such here in Florida that is not wise.

Disclaimer: Answers and comments provided are for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information. Please read our Terms of Service.