Determining “enough” car insurance typically begins with your state’s mandated liability coverage. This foundational coverage helps you cover some, if not all, of the injuries and damages for which you might be held responsible in an accident. A common minimum liability structure is $25,000/$50,000/$25,000, which translates to:
- $25,000 for bodily injury per individual1
- $50,000 for total bodily injury per accident2
- $25,000 for property damage per accident3
However, state requirements vary significantly; your specific state might enforce higher or lower limits than these, and could also demand additional coverages, such as personal injury protection. If you are leasing or financing your vehicle, your lender will likely necessitate liability coverage exceeding your state’s minimums, in addition to comprehensive and collision coverage.
It’s crucial to understand that your state’s minimum car insurance requirements are just that—minimal coverage. It is generally advisable to carry more liability coverage than legally required to avoid out-of-pocket expenses for any difference.
- Bodily injury: 55% of Progressive customers opt for coverage exceeding their state’s minimum.
- Property damage: 60% of Progressive customers choose coverage higher than their state’s minimum.
Utilize a car insurance calculator to estimate the appropriate amount of liability coverage and other types of coverage for your specific situation.
Essential Car Insurance Coverages: A Quick Guide
Seeking a brief overview of the coverages you might need? The table below outlines the most common types of coverage, what they protect against, and whether they are typically mandatory.
| Coverage | What it Covers | Required? |
| Liability coverage | Injuries & damages you cause to others | In almost every state |
| Comprehensive coverage | Damage to your car from events beyond your control (e.g., theft, weather) | Only if leasing or financing |
| Collision coverage | Damage to your car from accidents with other vehicles or objects | Only if leasing or financing |
| Personal injury protection (PIP) | Pays for medical bills, funeral expenses, & more for you/passengers | Only in some states |
| Medical payments (MedPay) | Primarily pays for medical bills for you/passengers | Only in some states |
| Uninsured/underinsured motorist (UM/UIM) | Pays for injuries & damages caused by drivers with insufficient or no insurance | Only in some states |
Determining Adequate Auto Liability Coverage
If you own a home, have savings, and other valuable assets, it’s prudent to carry sufficient liability coverage to safeguard them in the event you are deemed liable in an accident. Begin by calculating your net worth using the following formula:
Value of home + value of cars + savings + investments – debt = net worth
Your primary assets include the value of your home, vehicles, savings, and investments. Your net worth is the sum of these assets minus your outstanding debts.4 The goal is to ensure your liability coverage is ample enough to protect these assets. The following types of liability coverage provide the necessary protection:
How Much Bodily Injury Liability Coverage is Recommended?
Given that injury-related costs can significantly exceed property damage expenses, your total bodily injury limit (the middle number in the $25,000/$50,000/$25,000 example) should ideally surpass your net worth.5 For instance, if your net worth is $90,000, a suitable policy structure might be $50,000/$100,000/$50,000, providing you with $100,000 in total bodily injury coverage per accident.
Example: Chris causes an accident resulting in $15,000 in medical bills for the injured driver. His policy covers up to $50,000 in bodily injury per person and $100,000 in total bodily injury per accident. Since both his per-person and per-accident limits comfortably exceed the claim amount, his insurance would fully cover the injured driver’s medical bills.
How Much Property Damage Car Insurance Coverage is Recommended?
Similar to bodily injury liability, your property damage liability limit (the third number) should be sufficient to cover your potential losses. For example, if you have $25,000 in property damage coverage, and your net worth exceeds that amount, you’re exposing yourself to financial risk if you cause more than $25,000 in property damage in an auto accident.
Is Comprehensive & Collision Coverage Necessary?
Comprehensive Auto Coverage
- What does it cover? Comprehensive coverage protects your vehicle from perils outside your control, such as theft, vandalism, fire, collisions with animals, glass breakage, and weather-related damage.6
- Is it required? No states mandate comprehensive coverage. However, if you lease or finance your vehicle, your lender will almost certainly require you to carry it.
- Should I have comprehensive coverage? Even if you own your car outright, comprehensive coverage can be a worthwhile investment if your vehicle’s value is more than a few thousand dollars or if you wouldn’t be able to afford repairs or a replacement if it were damaged. At Progressive, the average monthly cost for comprehensive coverage is approximately $11 for a six-month policy.
- Important note: If you decide to add comprehensive coverage, ensure you select a deductible that you can comfortably afford should you need to file a claim. While a higher deductible might reduce your car insurance premium per policy period, it could lead to substantial out-of-pocket expenses if you make a claim.7
Example: Caitlyn, Chris’ wife, is driving late at night when a deer suddenly runs into the road, causing $5,000 in damage to her car. Unfortunately, they lack comprehensive coverage, leaving them responsible for the full $5,000 repair bill for Caitlyn’s car, which, despite being five years old, is still valued at approximately $11,000. Had they carried comprehensive coverage with even a $1,000 deductible, they would have saved nearly $4,000 on repair costs after accounting for the coverage premium.
Collision Coverage
- What does it cover? Collision coverage pays to repair or replace your car if it’s damaged in an accident involving another vehicle or an object (e.g., a street sign or guardrail).8 With Progressive, your collision coverage can also extend up to $1,000 for your pet’s medical bills if they are injured in a covered accident.9
- Is it required? No states mandate collision coverage, but many lenders will require it if you lease or finance your vehicle.
- Should I have collision insurance? Similar to comprehensive coverage, collision coverage is generally beneficial if you cannot afford to pay out of pocket for damages to your car, or if your vehicle is valued at more than a few thousand dollars.10 At Progressive, collision coverage costs, on average, around $46 per month for a six-month policy.11
- Important note: If you add collision coverage to your policy, ensure you choose a deductible you can comfortably afford.
Example: Chris parks his car on the street overnight. In the morning, he discovers that someone hit his rear bumper, causing $1,000 in damage. Chris does not have collision coverage on his car, as it’s only valued at around $2,000. He decided it wasn’t worth having this coverage since any claim payout would be minimal, even with a low deductible. Furthermore, he was confident he could afford to pay for the repairs or a new car if necessary.
Medical Payments (MedPay) Coverage
- What does it cover? Medical payments coverage, or MedPay, typically covers medical expenses incurred by you or your passengers after a car accident, even if you are riding in someone else’s car.12
- Is it required? MedPay is mandatory in only two states: Maine and New Hampshire (if you opt to purchase car insurance).
- How much MedPay coverage should I have? Coverage limits usually start at $1,000 per person and can go up to $10,000 per person.13 If you have health insurance, it might be wise to secure enough MedPay coverage to cover your health plan’s deductible. If you and your passengers do not have health insurance, you should seriously consider a higher limit or maxing out your coverage.
- Important note: Personal Injury Protection (PIP) also covers medical expenses, in addition to lost wages and funeral costs.14 If you have a choice between PIP and MedPay, PIP is almost always the preferred option due to its broader scope of coverage.
Example: Caitlyn and Chris are involved in an accident while riding as passengers in their friend Ted’s car. Everyone seems fine, but Chris and Caitlyn decide to get checked out at the hospital as a precaution. Chris’s X-ray costs $750, while Caitlyn’s CT scan is $1,000. Fortunately, they have MedPay coverage up to $2,000 per person, so their auto insurance covers both of their bills.
Personal Injury Protection (PIP) Coverage
- What does it cover? Personal Injury Protection (PIP) is similar to MedPay in that it covers medical bills for you or your passengers.15 However, depending on your state, it can also extend to lost wages, funeral expenses, and even services like housecleaning or child care if your injuries prevent you from performing your usual daily activities.16
- Is it required? Some states require PIP, but it is not mandatory or offered in most.17
- How much PIP coverage should I have? PIP coverage limits vary by state, with some maxing out below $10,000 per person and others reaching as high as $25,000 per person. If you already have health insurance or other insurance policies that cover the same expenses as PIP, your state’s minimum coverage levels may suffice. However, you should consider increasing your PIP coverage if:
- Your health insurance has low limits, coverage gaps, or high deductibles and co-pays.
- You desire additional coverage for lost wages, funeral expenses, or child care.
- You frequently give rides to others who could hold you responsible for medical expenses after an accident.
Example: It’s Chris’s turn to lead the office carpool. After picking up three colleagues, he’s involved in a fender bender that leaves two of his co-workers with $500 in medical bills each. They file a claim with Chris’s insurance, which provides $2,000 in PIP coverage per person—enough to cover both of their medical bills.
Uninsured/Underinsured Motorist (UM/UIM) Coverage
- What does it cover? Uninsured motorist coverage (UM) protects you if you are hit by a driver who lacks insurance.18 Underinsured motorist coverage (UIM) provides protection if the at-fault driver’s liability limits are insufficient to cover all your medical bills or damages.19
- UM and UIM coverage is often structured similarly to liability coverage, for example: $15,000 bodily injury per person / $30,000 total bodily injury per accident / $15,000 for property damage per accident.20 Some states may list UM/UIM property damage coverage separately from UM/UIM bodily injury limits. Additionally, you can sometimes waive UM/UIM property damage coverage if you have collision coverage, as these two coverages can overlap.
- Is it required? Some states mandate UM/UIM coverage, but most do not. You may also be required to carry UM/UIM coverage if you lease or finance your vehicle, depending on your lender.
- How much UM/UIM coverage should I have? Several states require your UM/UIM coverage limits to match your liability insurance limits.21 Even if your state doesn’t mandate it, aligning your UM/UIM and liability coverage limits is a sound strategy to ensure an equal level of protection whether you are at fault or hit by someone else.
- Important note: If you reside in a state with a high percentage of uninsured drivers, but UM coverage is not required, you should strongly consider purchasing it. New Mexico, for instance, had an estimated uninsured driver rate of 20.8% in 2015, according to the Insurance Research Council.
Example: Caitlyn and Chris are rear-ended by a driver who doesn’t have insurance. The damage to their car amounts to $3,500. However, since they have uninsured motorist coverage for up to $5,000 in property damage, their insurance covers the repairs.
Additional Coverages to Consider
- Rideshare Insurance: This is a crucial (and often mandatory) choice if you drive for a ridesharing platform like Uber or Lyft. Rideshare coverage bridges the gaps between your personal auto insurance and any insurance provided by the ridesharing company, ensuring continuous protection whether you’re awaiting a ride request or dropping off a passenger.22
- Gap Insurance: If you are leasing or financing your vehicle, gap insurance might be suitable for you. This optional coverage pays the difference between what you owe on your vehicle and its actual cash value if it is totaled. So, if your car is declared a total loss, you will receive its actual cash value plus the additional amount you owe on it, allowing you to pay off your loan or lease. Bear in mind that you will need comprehensive and collision coverage to add gap coverage to your policy.