How Much Auto Insurance You Should Have [2023]

You never know when an accident will occur, but that doesn’t mean you shouldn’t be prepared. Although only 49 states require drivers to carry auto insurance, auto insurance protects drivers financially from high out-of-pocket costs following an accident.  

Whether a driver is required to or chooses to purchase auto insurance, knowing how much auto insurance you should have and understanding the types of auto insurance coverage available ensures that you have the right policy in place to protect you from most of the risks on the road. 

To drive legally, you must carry the state minimum auto insurance. Here’s more on minimum car insurance requirements. 

What are minimum auto insurance requirements?

Do you have to have auto insurance? Depending on where you live, all drivers are required to purchase a minimum amount of car insurance. Although the required amount of coverage may differ from state to state, liability insurance coverage, which is made up of bodily injury and property damage, does not change.

When reviewing the required coverage amounts, you’ll likely see the coverage amount expressed in three different numbers, each indicating the required amount of bodily injury and property damage insurance:

• Bodily injury: Covers the cost of medical expenses and lost wages for individuals other than the at-fault driver
• Property damage: Covers the cost of property damage for individuals involved in the accident other than the policyholder. 

For example, Georgia carries a liability limit of 25/50/25, which means drivers must purchase $25,000 in bodily injury liability coverage per person, $50,000 in bodily injury liability coverage per accident, and $25,000 in property damage per accident.

In addition to liability coverage, states may require a few other types of coverage, including:

• Uninsured/underinsured motorist: Covers medical expenses, vehicle damage, and lost wages for the policyholder after they are hit by an uninsured or underinsured motorist. 
• Medical payments: Covers medical expenses for the policyholder and passengers. 
• Personal injury protection (PIP): Covers medical expenses, funeral expenses,  lost wages, and child care.

If you are shopping around for insurance, be sure to confirm the minimum coverage auto insurance required insurance for your state.

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How Much Auto Insurance You Need in Each State

Here are the car insurance requirements by state:

What states don’t require car insurance? New Hampshire doesn’t require drivers to carry auto insurance, but local drivers who choose not to purchase coverage must present proof they can meet the financial responsibility requirements. This means they need to prove they can cover the expenses associated with bodily injury and property damage following an at-fault accident. Failure to provide this proof could result in a license suspension.

Is state minimum insurance enough?

Consider your state laws and vehicle type to properly assess how much auto insurance you need. Although your state may require you to carry a certain amount of car insurance, the minimum amount isn’t always enough to cover you in the event of an accident. 

For example, say you live in Wisconsin, where the minimum liability insurance is 25/50/10. If you’re involved in an accident that causes $15,000 worth of damage to the other driver’s vehicle, you are on the hook for the remaining $5,000 that your provider didn’t cover. And if you don’t have the $5,000 to pay out of pocket, you could be sued by the other driver. 

Rather than purchase the minimum amount of car insurance, you can opt for the highest liability limit available. Of course, you should only increase the liability limit if you can afford it. 

In some cases, drivers are required to purchase more than the minimum required insurance. For example, if you have leased or financed your vehicle, you will likely be required to purchase full coverage auto insurance, which includes collision and comprehensive coverage. 

Optional Auto Insurance Coverage Types

Liability, comprehensive, collision, uninsured/underinsured, medical payments, and personal injury protection provide drivers with a lot of protection, but it still doesn’t cover every possible scenario. 

If you’re interested in further protection, a few optional coverages can help you avoid additional out-of-pocket costs:

• Collision auto insurance: Pays for damage to your vehicle resulting from a collision with another vehicle or object.
• Comprehensive auto insurance: Pays for damage to your vehicle resulting from extreme weather conditions, theft, vandalism, fire, or collision with an animal. 
• Gap insurance: Pays the difference between the vehicle’s value and the remaining lease or loan amount if your vehicle is totaled in an accident. 
• Rental reimbursement insurance: Pays for a rental vehicle or alternate transportation while your car is being repaired following an accident.
• Roadside assistance: Pays for roadside emergency assistance, such as fuel delivery, jump-start, or lockout. 

Adding these options coverage to your policy will increase your car insurance rates, but it may be worth it if you can save thousands in the event of an accident. 

What happens if you don’t have insurance?

Why do you need auto insurance? If a driver doesn’t have the state minimum required insurance, they could simply receive a ticket, but they also face license and registration suspension. 

What are the costs of not having auto insurance? An uninsured driver runs the risk of paying out of pocket for all property damage and bodily injury expenses for themselves and any other party impacted by an accident since they will be held financially responsible whether they have insurance or not. 

Should a driver be unable to cover the out-of-pocket expenses, they could be sued by the other driver, resulting in wage garnishment or seizure of their assets. 

If you only carry the state minimum required insurance, this would still be helpful in the event of an accident. Rather than pay $20,000 without insurance, you can ensure that your provider covers at least a portion of the expenses.

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What deductible should you choose?

You’ll have to choose an auto insurance deductible if you buy collision and comprehensive auto insurance. This is the amount paid out of pocket when filing a claim for your vehicle after it has been damaged. 

If your vehicle is damaged, the repairs cost $2,000, and your deductible is $500, your provider will cover the remaining $1,500. However, if your vehicle is totaled, which can happen if the repair cost exceeds the vehicle’s value, the insurance company will pay you the actual cash value of the vehicle minus the deductible. So if your vehicle was worth $15,000, and your deductible is $500, your provider would pay you $14,500. 

Since the deductible is paid before your vehicle can be repaired or replaced, it is best to choose an affordable deductible. Most insurance companies charge between $100 and $1,000 for the deductible. You can expect a higher premium if you have a low deductible but lower rates if you have a higher deductible.

Your deductible doesn’t impact just your monthly rates — if you were to get into an accident, you’d also have to cover this out-of-pocket cost before your insurance company can repair or replace your vehicle. A lower premium may be appealing, but can you afford to pay the $1,000 deductible following an accident?

How much auto insurance should you have?

If you’re still asking “How much car insurance do I need?” You should know that every state except New Hampshire requires car insurance, so your state insurance laws will determine how much auto insurance you should have. You’ll need minimum liability insurance to drive legally, but your auto loan or lease might require full coverage, which includes collision and comprehensive coverage.

You might want to buy more auto insurance if you drive a newer vehicle or are adding a young driver. For example, roadside assistance and rental reimbursement can ensure you stay on the road no matter what happens.

Once you know how much car insurance you should have, compare auto insurance quotes online from multiple companies to get the best rates.

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