How much car insurance is necessary?

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Here's what you need to know...
  • Most states have a minimum requirement for car insurance
  • Often drivers only purchase the minimum amount of insurance to keep premiums down
  • Even in states that allow self-insurance, there are minimal amounts of protection every car owner must have

Typically the state’s minimum amount is reflected in a three-part number that looks something like 30/50/25. These three numbers represent liability coverage, property damage, and personal injury protection (PIP).

That number explains the monetary compensation provided for other people you may injure, damage to other cars or property, and personal injuries sustained by you and your passengers.

If you need an insurance policy, enter your ZIP code above and see side-by-side car insurance quotes online.

Am I required by law to carry all three types of minimum coverage?

A binder labeled "requirements".

Though there are a small number of exceptions, the vast majority of U.S. states require minimum amounts of all three coverages. The idea behind the requirements is to provide some protection in case of an accident.

The minimum requirements will vary from one state to the next, and some states even require a bit more coverage. For example, New York State requires minimum coverages of:

  • $25,000/50,000 for injury
  • $50,000/100,000 for death
  • $10,000 for property damage

New York is also a no-fault state, meaning that each insurance company is responsible for covering its own drivers regardless of who causes an accident.

Furthermore, the insurance policy on a given vehicle must be in the name of the person who has registered the vehicle, regardless of whether or not he is the owner.

As long as the vehicle remains registered it must have valid liability insurance; seasonal motorcycles are an exception.

Should I consider more liability coverage than state minimums?



If you have valuable assets like real estate, securities, collectibles, and so on, most of them can be seized in order to pay for those things your insurance doesn’t cover.

It would be a shame to lose your vacation property on the lake simply because you didn’t want to carry higher liability amounts.

If you have health insurance and a disability policy through your employer, you probably don’t need extra personal injury protection. Those things would be covered under your other two policies in most cases.

Should I worry about buying collision and comprehensive coverage?

Business man drawing insurance concept


As far as we know, there are no states that require drivers to carry collision and comprehensive coverage. However, if you take out a loan to purchase a brand-new car your bank may require you to purchase this coverage. If so, it is simply protecting its investment in your vehicle.

Without such protection the bank can lose a significant amount of money if your car is totaled in an accident, stolen off the street, or destroyed in a weather-related event.

Any comprehensive or collision coverage required by your bank can be dropped once your loan is paid off.

Even without an outstanding car loan you might consider these two extra coverages if you don’t have the financial resources to repair or replace your vehicle out-of-pocket. In other words,

In other words, if your car has a Blue Book value of $7,000, and you don’t have that kind of cash sitting around, you may want to carry collision and comprehensive just in case your vehicle is destroyed.

Otherwise you may be left to purchase something you can pick up for couple of hundred dollars.

One final thing to consider in terms of comprehensive and collision coverage is whether or not you have invested any money in customizing your vehicle.

If you bought high-performance parts, restored a classic car to mint condition, or invested any other significant amounts of money in your vehicle, you most definitely want to get the extra coverage.

Without that coverage, an insurance company will only repair or replace your vehicle up to its Kelly Blue Book or NADA value.

If you want to compare car insurance quotes online you can get started right now by entering your ZIP code below.

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