Nerdy takeaways
- State laws mean that you need a certain amount of insurance to drive legally.
- You need at least as much liability insurance as your state requires, but that might not be enough to cover you in the event of a bad accident.
- States often require other types of auto insurance, such as uninsured motorist coverage and personal injury protection.
- You’ll need additional coverage — comprehensive and collision insurance — if you have an auto loan or lease.
How much car insurance is enough?
No single amount of car insurance is enough for everyone, because how much you need depends on:
Your state’s laws. Drivers need a minimum amount of insurance in every state. States usually require liability insurance and at least one other type of insurance. NerdWallet recommends most people get more coverage than their state requires for better protection after a serious accident.
Your vehicle. A basic car insurance policy covers only the injuries and property damage you cause to others. You would need a policy with comprehensive and collision insurance for coverage against damage from a crash you cause, the weather, animals, falling objects or thefts.
Your property and assets. A serious crash could endanger your savings if you cause damage that you don’t have the cash to cover. There’s a good chance you need high amounts of liability insurance and even an umbrella policy if you have a home and other important assets.
Your personal tolerance for risk. People have different comfort levels with risk. Some drivers want as much car insurance as they can afford. Others carry only as much as they absolutely need. Many people probably find themselves somewhere in the middle. Where you stand will go a long way in deciding how much car insurance is enough for you.
How much liability insurance do you need?
Nearly every state requires two types of liability insurance: bodily injury liability and property damage liability coverage.
You need at least as much liability insurance as your state’s minimum car insurance requirements call for. But most states require relatively low limits compared to the damage a serious crash could cause. If your policy doesn’t have enough insurance, you may end up owing thousands of dollars for damage that your insurance won’t cover.
For example: Let’s say you have only as much liability insurance your state requires. After a crash, your car insurance policy will pay:
- Up to $25,000 for each person’s injuries.
- A max of $50,000 for all injuries.
- Up to $25,000 for property damaged in the accident.
This might sound like a lot of coverage. But the most recent data from the Insurance Information Institute says the average cost of a bodily injury liability claim in 2024 was $28,278 — that's $3,278 more than your policy’s per-person limit of $25,000 that you’d be left to cover. After a serious crash that involves multiple people, it’s easy to imagine being responsible for far more damage.
Some drivers need umbrella insurance for more coverage
Insurance companies limit the amount of liability insurance that you can get in an auto policy. If you max out your carrier’s liability limit and still want more coverage, umbrella insurance may be a solution.
Umbrella insurance adds additional liability coverage over your existing auto (and home) insurance, often in $1 million increments. Umbrella insurance offers another layer of coverage so that after a serious crash you won’t have to worry about losing your home, future income or valuables.
If you don’t have many valuable assets to protect, an auto insurance policy’s liability coverage (with high limits) may be enough for you.
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Do you need comprehensive and collision coverage?
Liability coverage can help you deal with another driver’s bills if you cause an accident, but it won’t help you repair or replace your own car. For this, you’d need comprehensive and collision.
The term “full coverage insurance” typically means an auto insurance policy with the coverage your state requires plus collision and comprehensive coverage. These two kinds of coverage help to pay for most types of damage to your own vehicle, regardless of who caused it.
- Collision coverage pays for damage to your vehicle after you collide with another driver's car or an object.
- Comprehensive coverage pays for most other types of damage to your car, including from theft, animals, vandalism and the weather.
States don’t require comprehensive or collision coverage, but you’ll likely need them both if you lease your car or finance it with an auto loan. You may also want to have full coverage if you couldn’t afford to replace your car by yourself.
That said, you may not need full coverage once you’ve paid off your auto loan. You might be able to drop comprehensive coverage if your car isn’t worth much and you can afford to replace it on your own.
🤓 Nerdy Tip
Pay attention to the car insurance deductibles that come with comprehensive and collision coverage. A deductible is the amount of money that you promise to cover in the future when you need to make a claim. Raising your deductible could make your car insurance cheaper, but with a high deductible you might not be able to make claims for minor damage. See what you could save on car insurance
Easily compare personalized rates to see how much switching car insurance could save you.
Other types of car insurance you may need
There are more kinds of car insurance that you might need or want to have for extra coverage. Below, we list a handful of the most common types of car insurance and the drivers who may benefit from them.
Uninsured/underinsured motorist coverage
Your uninsured and underinsured motorist coverage can help pay for your expenses after a crash with someone who has no insurance or too little insurance to cover the damage they caused.
Who needs it? Many states require uninsured or underinsured motorist coverage (often both). These types of coverage may be worth getting if you live in an area where there are lots of uninsured drivers.
Personal injury protection
Your personal injury protection (PIP), or no-fault insurance, pays for your medical expenses after a crash. It may also help to cover lost wages, rehab services and even funeral-related expenses for you and your passengers. Unlike liability insurance, personal injury protection covers your expenses.
Who needs it? Drivers in 12 states need personal injury protection, though it’s optional in others. If PIP is optional for you, it could still complement your health insurance.
Medical payments coverage
Like personal injury protection, medical payments coverage helps cover medical expenses after an accident, regardless of fault. But unlike personal injury protection, medical payments coverage doesn’t cover lost wages or provide additional benefits.
Who needs it? Drivers in Maine, New Hampshire and Pennsylvania need medical payments coverage.
Gap insurance
Also called loan/lease coverage, gap insurance helps to cover the difference between the amount you’d receive from an insurer if your car was totaled, and the value of your loan or lease.
Who needs it? You may need gap insurance to get an auto lease or loan, but this type of coverage isn’t required by any state.
New car replacement
New car replacement coverage helps make up for the cost of depreciation if you total your new-model vehicle. Without this coverage, you’d only be insured for the value of your new car minus its depreciation. This could mean that after a crash, you wouldn’t receive back enough money to pay for the same completely new car.
Who needs it? You may need new car replacement if you just bought a brand new vehicle. Insurers usually limit this coverage to drivers whose cars are one to five years old.
Rideshare insurance
Rideshare insurance is a common add-on that provides you with insurance coverage while you’re driving for a company like Uber or Lyft and waiting for a fare.
Who needs it? You may need rideshare insurance even if you have your own personal auto insurance policy. Your regular insurance policy might not provide any coverage while you’re driving for a rideshare company.
Roadside assistance
Roadside assistance can send help your way if you need a tow, jump-start, or other roadside services like fuel delivery or a tire change.
Who needs it? You may already get these benefits if you’re a member of AAA or you have certain credit cards. You might not need to pay extra for roadside assistance, but you might still want to have it for the sense of security it might bring you.
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- 1. Insurance Information Institute. Facts + Statistics: Auto insurance. Accessed Jun 24, 2026.
