Buying car insurance is one of the thankless tasks that come with adulting. But if you’re not protected adequately with the right insurance coverage levels, you can put your property, savings and future earnings at risk.

Furthermore, getting into a crash with an uninsured motorist could spell disaster – in 2019, 12.6 percent of motorists, or about one in eight drivers, were uninsured, according to a 2021 study by the Insurance Research Council.

We'll walk you through our guide so you can understand what type of car insurance you should get. You can also use the tool to see auto insurance coverage recommendations based on what drivers like you have purchased.

HOW MUCH CAR INSURANCE DO I NEED?

See recommended coverage levels for drivers like you.

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You can also use our Car Insurance Estimator tool to determine how much car insurance you need

How much car insurance do I need?

First, you need enough insurance to drive legally. Insurance is required in every state but New Hampshire, so make sure you understand your state's car insurance minimum requirements. If you’re wondering how much car insurance you need, the short answer is that you need the minimum amount of car insurance required by your state to drive legally.

However, the state minimum is rarely enough coverage to provide protection in the case of an accident or car crash. CarInsurance.com editors recommend the following liability limits of 100/300/100:

  • up to $100,000 for the medical bills of those you injure
  • with a $300,000 cap per accident
  • and up to $100,000 to repair other drivers’ cars and property that you damage.

You should purchase enough car insurance to protect yourself from financial ruin if you have a car accident. Liability insurance protects other drivers in the case of an accident, but the minimum limits typically are so low they won’t provide adequate coverage – they also won’t help cover the cost of repairs to your car.

What are the types of car insurance coverage?

There are six basic types of car insurance coverages: liability, collision, comprehensive, uninsured/underinsured motorist protection, personal injury protection and medical payments coverage.

  • Liability: Liability coverage insures you if your car causes injury or damage to another person's property. Most states require you to have liability coverage to legally drive on the road.
  • Collision: Collision coverage pays for damages to your car caused by collision, whether or not the accident was your fault.
  • Comprehensive: Comprehensive insurance covers damages caused to your car due to factors other than collision, such as weather, fire or theft.
  • Uninsured motorist coverage (UM/UIM): Uninsured/underinsured motorist coverage pays for damage to your vehicle in case the other party does not have enough insurance or no insurance after an accident.
  • Personal injury protection (PIP): PIP is coverage that pays your medical bills and covers lost wages and other expenses for you or your passengers regardless of who is at fault in an accident.
  • Medical payments coverage (MedPay): MedPay or medical payments coverage is similar to personal injury protection. It covers your medical expenses related to injuries resulting from an accident, regardless of who was at fault.

How much liability insurance do I need?

Minimum liability coverage 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.

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 and the second is the per-accident limit.
  • The third number is the property damage liability limit, which covers damage to property.

50/100/50 coverage limits

This level of coverage is recommended for those who have an older car, few assets, don’t drive often or are on a tight budget, such as college students or retirees.

100/300/100 auto insurance limits

For middle-income earners with a typical level of savings, this level is adequate in most circumstances. The cost of liability insurance, once you have bought the basic levels, does increase, but not exponentially, according to 2022 data:

  • The average annual rate for state minimum liability-only coverage is $511.
  • The average annual rate for liability coverage with limits of 50/100/50 is $637.
  • The average annual rate for full coverage with limits of 100/300/100 and a $500 deductible is $1,682.

To see what the average driver pays for liability coverage in each state, and how much more you would pay to boost your coverage, refer to the table below.

Average driver cost for state minimum vs. basic liability insurance, by state
StateState Minimum Liability Only50/100/50 Liability Only$ increase% increase
Alaska$336$414$7823%
Alabama$420$585$16539%
Arkansas$422$510$8821%
Arizona$494$697$20341%
California$582$864$28248%
Colorado$467$726$25955%
Connecticut$773$849$7610%
Washington D.C.$577$663$8615%
Delaware$821$999$17822%
Florida$908$1,586$67875%
Georgia$567$736$16930%
Hawaii$389$519$13033%
Iowa$263$318$5521%
Idaho$326$386$6018%
Illinois$484$530$4610%
Indiana$384$442$5815%
Kansas$389$412$236%
Kentucky$717$927$21029%
Louisiana$726$1,260$53474%
Massachusetts$523$660$13726%
Maryland$607$648$417%
Maine$330$335$52%
Michigan$711$755$446%
Minnesota$479$511$327%
Missouri$525$586$6112%
Mississippi$434$583$14934%
Montana$389$525$13635%
North Carolina$396$435$3910%
North Dakota$340$353$134%
Nebraska$350$383$339%
New Hampshire$411$441$307%
New Jersey$989$1,120$13113%
New Mexico$376$546$17045%
Nevada$683$1,009$32648%
New York$875$960$8510%
Ohio$308$365$5719%
Oklahoma$352$545$19355%
Oregon$551$594$438%
Pennsylvania$398$501$10326%
Rhode Island$648$782$13421%
South Carolina$628$793$16526%
South Dakota$267$289$228%
Tennessee$368$445$7721%
Texas$520$659$13927%
Utah$526$645$11923%
Virginia$469$489$204%
Vermont$306$334$289%
Washington$505$664$15931%
Wisconsin$375$419$4412%
West Virginia$474$530$5612%
Wyoming$293$331$3813%

250/500/100 coverage limits

If you own an expensive home or have a high net worth, consider supplementing this level of coverage with an umbrella liability policy that extends your protection by $1 million or more. It’s relatively cheap – a $1 million umbrella policy costs $150 to $300 yearly, on average, according to the Insurance Information Institute.

Do I need full coverage insurance?

Full coverage comprises comprehensive and collision: Comprehensive insurance pays for damage to your car from severe weather, fire, collisions with animals and theft; collision coverage pays to repair your car if you have an accident, regardless of fault.

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.

Do I need 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 coverage if your state allows it. It is a good idea to keep uninsured motorist coverages if you can afford to as it minimizes 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.

Do I need medical payments or personal injury protection coverage?

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. If you don’t have health insurance, these coverages are recommended.

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.

What are some other types of car insurance?

Auto insurance companies also offer a variety of optional coverages. Some may be more useful than others, so it’s important to review your policy and determine which apply to you:

  • Gap insurance: If your car is a total loss due to an accident, this coverage option will cover the difference between what you owe on your loan or lease and the actual cash value of the vehicle.
  • Roadside assistance coverage: This coverage may be a good choice for people who drive frequently. It covers any service calls and towing expenses if your car breaks down, but it does not pay for vehicle repairs.
  • Rental car reimbursement coverage: Pays for a rental car after a covered claim. Adding this endorsement could come in handy if your car is not drivable due to a covered incident.
  • Non-owner car insurance: Non-owner car insurance is a form of liability coverage that provides protection for people who don't own a vehicle but still need to drive someone else's on occasion. It pays out if you cause injury or property damage in a mishap with another person.
  • Mechanical breakdown insurance: If your car runs into trouble for reasons that are not related to an accident, mechanical breakdown insurance (MBI) is there to cover the costs of getting it fixed.
  • Rideshare insurance: Personal coverage typically doesn’t apply if you drive for a ridesharing company like Uber or Lyft.

What’s the cheapest car insurance I can buy?

According to a 2022 CarInsurance.com data analysis, Progressive had the cheapest auto insurance for a full-coverage policy with an annual rate of $895. See below for a table of the top 10 cheapest car insurance companies.

Top 10 Cheapest Companies for Full Coverage
Graph
Table
List of Cheapest Car Insurance Companies for Full Coverage
CompanyFull Coverage
Progressive$895
Geico$1,200
Travelers$1,322
Farmers$1,343
Erie$1,372
Owners Insurance$1,435
State Farm$1,505
Nationwide$1,619
Liberty Mutual$2,082
Allstate$2,164
 

Full Coverage: 100/300/100 with Comprehensive and Collision, $500 deductible

USAA is among the top 10 cheapest companies with a rate of $1,111 but is only available to military members, veterans and their immediate family.

How can I save money on car insurance?

Here are some ways you can save money on your car insurance payments:

  • 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: Safe driving, getting good grades, bundling with homeowners policy and installing safety features are a few ways you can get discounts on your car insurance policy.
  • Maintain a clean driving record and a good credit score.
  • Buy a vehicle that has a good safety record.
  • Raise your insurance deductible.

Expert commentary: How to find the best car insurance company for you

CarInsurance.com spoke with Aniruddha Pangarkar, assistant professor of marketing at the Austin E. Cofrin School of Business at the University of Wisconsin-Green Bay, about how shoppers should make purchasing decisions when it comes to auto insurance.

Low-mileage auto insurance companies are a good fit and highly beneficial for those consumers who drive less (typically lower than 7,500 miles in a given year). If you are an individual that has lower driving needs, then this is a perfect situation to save money and utilize it elsewhere.

Keep in mind that typically, car insurance companies offer two kinds of discounts for low-mileage consumers. The first is where consumers that drive below a certain threshold qualify (typically 7,500 miles as mentioned earlier, but again some companies have different thresholds, so it is best to check with an individual company that you are interested in).

In this first case, companies like Geico and State Farm offer highly competitive rates that can help drivers get substantial discounts. For the second type of discount, which is calculated based on a pay-per-mile rate, many insurance companies like Nationwide, Allstate and Liberty Mutual offer discounts in this category.

Many companies use apps to track driving history. Nationwide is a company that is reputed to offer good discounts in the pay-per-mile category.

The global pandemic has not just created mayhem and chaos with deaths and casualties, but it has also created some other economic problems, such as car insurance rates steadily increasing over the past 18-24 months.

One of the biggest challenges is that a supply chain and semiconductor shortage crisis has resulted in new cars not being available. As a result, there has been an unprecedented and high demand for both new and used cars, resulting in higher insurance rates.

Many car dealerships report booking for months in advance – something that was never the case in the United States. In addition, because of the pandemic and its impact, there has been an acute shortage of qualified car mechanics to repair cars.

To further compound this problem, the cost of auto parts has substantially increased, all of which adds to your car insurance rates. Furthermore, the increased availability and usage of apps, social media and technology while driving has resulted in distracted driving, resulting in accidents. This means higher insurance premiums for drivers.

If you are an individual who is financially getting impacted by the high rates for car insurance, then I recommend calling your insurance company and asking for discounts for military, students, educators, defensive driving, etc.

There are other ways to save on car insurance, such as increasing your deductible, considering minimum coverage by dropping comprehensive and collision coverage, and also calling up insurance companies to get lower quotes.

The insurance industry is highly competitive and many companies want to acquire new customers from rivals and competitors, which can help them achieve sustainable competitive advantage.

With the influx of so many insurance companies and their various promotional strategies, social media campaigns and advertising strategies, customers are often confused and unsure about choosing the right insurance provider.

Firstly, consumers need to understand each individual is unique and has different needs, wants, desires and budgets. I always advise consumers to compare websites of companies like Geico, State Farm, Progressive, Allstate, etc., to get quotes.

This gives you a good perspective of what services each company is offering and how much you are likely to pay for these. Compare and contrast these quotes to see which ones best match your needs.

Secondly, it is important to understand that factors such as your driving history (number of tickets/citations, clean driving history, etc.) impact your premium, along with your credit score and history. Individuals with a poor credit score are regarded as risky investments, which can increase your premium.

There are other factors that impact your insurance premium, such as the ZIP code where you live, the year, make and model of your car, how many miles you drive annually (if you are a low-mileage driver there are some discounts you can ask), your age, etc.

It is important to be aware of all these factors because you can ask discounts for some of these that you may qualify for, and thus get a good deal.

If you have a higher coverage limit, then consider lowering it, which in turn will lower your premium. A cautious and careful driver who is not likely to get into accidents could consider taking lower coverage limits as mandated by their state. Another way to lower your premium is to increase your deductible.

These steps can help you choose an appropriate and reliable insurance provider matching your needs.

Resources & Methodology

Sources

Insurance Information Institute. “Facts + Statistics: Uninsured motorists.” Accessed July 2022.

Methodology

CarInsurance.com’s Car Insurance Estimator tool relies on 2022 data from Quadrant Information Services for a 40-year-old male driver with a good driving record, 12-mile commute to work and full coverage insurance.

– Michelle Megna contributed to this story.