How much car insurance do I need?

The short answer

Buy liability limits that are at least as large as the assets a jury could reach. For most working households that means 100/300/100: $100,000 per injured person, $300,000 per accident, $100,000 in property damage. Add uninsured and underinsured motorist coverage at the same limits, keep comprehensive and collision while the car is worth more than roughly ten times its own premium, and set deductibles at the highest number you could write a check for today.

• Liability floor. Most households: 100/300/100. Homeowners with equity or a second income: 250/500/100 plus an umbrella policy.
• UM/UIM. Match your liability limits. The Insurance Research Council found 15.4% of drivers were uninsured in 2023.
• Med-pay or PIP. $5,000 to $10,000 of med-pay in at-fault states; the state-mandated PIP amount in no-fault states.
• Comp and collision. Keep them until the annual premium passes about 10% of what the car is worth.
• Deductibles. $500 to $1,000 for most drivers, higher only if the cash is genuinely sitting in savings.

The typical driver spent $1,282 on auto insurance in 2023, up 14.0% in one year according to the NAIC data published by Triple-I, and the motor vehicle insurance component of the Consumer Price Index rose another 6.0% in 2025. Higher limits are a small share of that bill. The gap between minimum limits and real ones usually costs less than a phone plan.

What 100/300/100 actually means

Liability limits are written as three numbers, called split limits. On a 100/300/100 policy:

• $100,000 is the most the policy pays for injuries to any one person you hurt.
• $300,000 is the most it pays for all bodily injury in a single crash, no matter how many people are hurt.
• $100,000 is the most it pays for property you damage: their car, a guardrail, a storefront, a parked Tesla.

Two details trip people up. First, the per-person limit caps each individual claim, so a 100/300/100 policy cannot pay $300,000 to one badly injured driver. Second, liability covers other people only. Your own injuries run through med-pay, PIP, health insurance or UM coverage, and your own car runs through collision.

Some carriers instead offer a combined single limit, for example $500,000 CSL, which is one pot of money for injuries and property together. A CSL is usually more flexible than split limits of similar size because nothing is stranded in the wrong bucket.

Why state minimums are a trap

Minimums were set by legislatures, some of them decades ago, and they have not kept up with medical or repair costs. Triple-I reports the average bodily injury liability claim reached $28,278 in 2024 and the average property damage claim $6,770, both from its auto insurance fact file. Those are averages: a single serious injury with surgery and lost wages clears $100,000 without difficulty, and a three-person crash clears $300,000.

When the claim exceeds your limit, the insurer pays the limit and walks away. The rest is yours. Plaintiffs collect from wages, bank accounts and home equity, and judgments can be renewed for years in many states.

Limits above are drawn from the Triple-I financial responsibility table, the California Department of Insurance, the North Carolina Department of Insurance, New York DFS and the Texas Department of Insurance. Requirements change, so confirm current limits with your own state regulator before you buy.

Uninsured and underinsured motorist coverage

Liability protects other people from you. UM and UIM protect you from other people. Uninsured motorist coverage pays your injuries when the at-fault driver has no insurance or flees the scene. Underinsured motorist coverage fills the gap when the at-fault driver's limits run out before your bills do.

This is not a marginal risk. Triple-I, citing the Insurance Research Council, reports 15.4% of motorists were uninsured in 2023, more than one in seven drivers, up from 11.6% in 2019. The IRC's 2025 study put the combined uninsured-plus-underinsured share at roughly one in three drivers nationwide. In practice, the driver who hits you is often carrying the same minimum limits you were told to avoid.

Rules vary sharply by state. About 20 states and the District of Columbia mandate UM or UIM, North Carolina now includes underinsured motorist coverage on every policy issued or renewed since July 1, 2025, and some states let insurers reduce UIM by the amount the at-fault driver already paid. Buy UM/UIM at your liability limits, and ask whether your state uses "excess" or "offset" UIM, because the answer changes what you actually collect.

Med-pay, PIP and your health plan

Medical payments coverage (med-pay) is a small no-fault bucket, usually $1,000 to $25,000, that pays your and your passengers' medical bills regardless of who caused the crash. It also covers health insurance deductibles and copays, which is why $5,000 to $10,000 is worth the few dollars a month for most families.

Personal injury protection (PIP) is the broader no-fault version required in about a dozen states, and it can also pay lost wages and replacement services. New York requires $50,000 of PIP per the state's Department of Financial Services. Texas includes PIP on every policy unless you reject it in writing, according to the Texas Department of Insurance. Michigan lets drivers choose their PIP medical level at purchase.

If you have a high-deductible health plan, med-pay or PIP is usually the cheapest way to cover the first few thousand dollars after a crash. If you have rich employer coverage with a low out-of-pocket maximum, a modest $5,000 of med-pay is generally enough.

Comprehensive, collision and the 10x rule

Collision pays when you hit something. Comprehensive pays for the things that happen to a parked or driving car without a collision: theft, hail, flood, fire, a deer, a cracked windshield. Triple-I reports 80% of insured drivers carry comprehensive and 77% carry collision. Lenders and lessors require both while you owe money on the car.

Once the loan is gone, use the decision rule Triple-I publishes in its savings guide: consider dropping physical damage coverage when the car is worth less than about ten times the premium for that coverage. Put concretely, if comp and collision cost $600 a year and the car books at $4,500, keep the coverage. If the same $600 protects a $2,800 car, self-insuring is the rational choice, because the most you can ever collect is the car's value minus the deductible.

Two exceptions. If losing the car would strand you and you have no cash cushion, keep collision longer than the math suggests. And if you owe more than the car is worth, add gap coverage, since neither collision nor comprehensive pays more than actual cash value.

Deductible math that actually works

Triple-I puts typical auto deductibles at $500 or $1,000. Moving from $200 to $500 cuts comprehensive and collision cost by 15% to 30%, and going to $1,000 can save 40% or more, per its nine ways to lower your auto insurance costs. Consumer Reports measured the $500 to $1,000 jump at 20% to 25%, or $464 to $525 a year for the drivers it studied.

Run the payback period rather than guessing. If raising the deductible from $500 to $1,000 saves $220 a year, you are accepting $500 more risk to save $220, so the change pays for itself in about 27 months and you come out ahead unless you file a claim more than once every two and a half years. The average collision claim was $5,489 in 2024, well above any deductible, so the deductible mostly changes how much of a large loss you absorb, not whether the coverage works.

Never choose a deductible larger than your emergency fund. A $2,500 deductible that you cannot fund is a coverage gap with a discount attached.

When you need an umbrella policy

An umbrella policy sits on top of auto and home liability and pays after the underlying limits are exhausted, usually in $1 million increments. Triple-I puts the typical cost at $200 to $300 a year for the first $1 million, which is the cheapest liability money in personal insurance.

Carriers set trigger limits before they will sell you one. Expect to be required to carry:

• Auto liability of 250/500/100 or a $500,000 combined single limit on every vehicle.
• Home or renters liability of $300,000 and often $500,000.
• UM/UIM at matching limits if your state allows an umbrella to extend over it.
• All household drivers on the policy, including teenagers, before the umbrella attaches.

Consider one if your net worth exceeds your liability limits, you have a teen driver, you own a rental property, you host frequently, you have a dog, a pool or a trampoline, or you hold a public-facing job with visible income. See umbrella insurance for how the layers stack.

Five expensive mistakes

• Buying minimums to save $30 a month. The upgrade from 25/50/25 to 100/300/100 is typically a small fraction of the premium and multiplies your protection fourfold.
• Rejecting UM/UIM in writing without reading it. Many states bury the waiver in the application. With more than one in seven drivers uninsured, this is the wrong line to cut.
• Keeping full coverage on a car worth less than 10x the premium. You are paying to insure a payout that cannot arrive.
• Insuring a financed car without gap coverage. Depreciation outruns amortization on most new vehicles in the first two years.
• Never re-shopping. Triple-I recommends at least three quotes; rate revisions since 2023 have reshuffled who is cheapest in almost every state. Our premium-lowering guide covers the full list of levers.

Coverage rules, mandatory offers and UM offsets vary by state, and your own limits should reflect your assets, income and household drivers. Treat the numbers here as a starting framework, then confirm the details for your state with a licensed agent.