What is the recommended car insurance coverage

While different states have different mandates for auto insurance, most basic car policies consist of six types of coverage. Here's what you need to know about each.

While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.

Note that each type of coverage is priced separately, so there is variability in policy limits and pricing.

Bodily injury liability

Bodily injury liability coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. It's recommended that policyholders buy more than the state-required minimum liability insurance, enough to protect assets such as your home and savings.

Medical payments or personal injury protection (PIP)

This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.

Property damage liability

This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

Collision

Collision coverage pays for damage to your car resulting from a collision with another car, an object, such as a tree or telephone pole, or as a result of flipping over (note that collisions with deer are covered under comprehensive). It also covers damage caused by potholes.

Collision coverage is generally sold with a separate deductible. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company and, if they are successful, you'll also be reimbursed for the deductible.

Comprehensive

This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Comprehensive covers events such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. It will also pay to repair your windshield if it is cracked or shattered.

Comprehensive insurance is usually sold with a separate deductible, although some insurers may offer the glass portion of the coverage without a deductible.

Uninsured and underinsured motorist coverage

Underinsured motorist coverage reimburses you, a member of your family, or a designated driver if one of you is hit by an uninsured driver or a driver who doesn’t have sufficient insurance to pay for your total loss. This coverage also offers protection in the event a covered driver is the victim of a hit-and-run or if, as a pedestrian, you are struck by an uninsured or underinsured motorist.

Next steps: Shopping for auto insurance? Here's how to find the right policy for you and your car.

If you’re wondering how much car insurance you need, the short answer is that you need the minimum amount of car insurance required by your state to drive legally. Insurance is required in every state but New Hampshire, so make sure you understand your state’s car insurance minimum requirements.

However, the state minimum is rarely enough coverage to provide protection in the case of an accident or car crash.

We’ll walk you through our guide so you can understand what type of car insurance you should get. You can also use the tool to see auto insurance coverage recommendations based on what drivers like you have purchased.

CarInsurance.com used quotes provided to users from Jan. 1, 2009, to May 31, 2010, to identify the most popular liability limits. Data does not include quotes for Alaska, Hawaii or Massachusetts.
Percents shown are for top three coverage choices. The remainder of users bought other combinations of liability limits, collision and comprehensive coverage.

You can also use our Car Insurance Estimator tool to determine how much car insurance you need.

CarInsurance.com editors recommend the following liability limits of 100/300/100:

• up to $100,000 for the medical bills of those you injure
• with a $300,000 cap per accident
• and up to $100,000 to repair other drivers’ cars and property that you damage.

You should purchase enough car insurance to protect yourself from financial ruin if you have a car accident. Liability insurance protects other drivers in the case of an accident, but the minimum limits typically are so low they won’t provide adequate coverage – they also won’t help cover the cost of repairs to your car.

Still, says Aniruddha Pangarkar, assistant professor of marketing at the Austin E. Cofrin School of Business at the University of Wisconsin-Green Bay, “a cautious and careful driver who is not likely to get into accidents could consider taking lower coverage limits as mandated by their state.”

What are the types of car insurance coverage?

There are six basic types of car insurance coverages: liability, collision, comprehensive, uninsured/underinsured motorist protection, personal injury protection and medical payments coverage.

• Liability: Liability coverage insures you if your car causes injury or damage to another person’s property. Most states require you to have liability coverage to legally drive on the road.
• Collision: Collision coverage pays for damages to your car caused by collision, whether or not the accident was your fault.
• Comprehensive: Comprehensive insurance covers damages caused to your car due to factors other than collision, such as weather, fire or theft.
• Uninsured motorist coverage (UM/UIM): Uninsured/underinsured motorist coverage pays for damage to your vehicle in case the other party does not have enough insurance or no insurance after an accident.
• Personal injury protection (PIP): PIP is coverage that pays your medical bills and covers lost wages and other expenses for you or your passengers regardless of who is at fault in an accident.
• Medical payments coverage (MedPay): MedPay or medical payments coverage is similar to personal injury protection. It covers your medical expenses related to injuries resulting from an accident, regardless of who was at fault.

How much liability insurance do I need?

Minimum liability coverage is rarely advisable, but if you can’t afford more, it’s better than no insurance. If you have no savings or assets, minimum liability coverage may suffice. In most states, the minimum liability required by your state is not enough to pay for serious injuries or to replace a newer car. It is only enough to drive legally.

As mentioned above, CarInsurance.com recommends liability limits of 100/300/100.

But there are other coverage limits. In the levels below:

• The first two numbers refer to bodily injury liability, which pays the hospital bills of anyone you injure: The first number is the per-person limit and the second is the per-accident limit.
• The third number is the property damage liability limit, which covers damage to property.

50/100/50 coverage limits

This level of coverage is recommended for those who have an older car, few assets, don’t drive often or are on a tight budget, such as college students or retirees.

100/300/100 auto insurance limits

For middle-income earners with a typical level of savings, this level is adequate in most circumstances. The cost of liability insurance, once you have bought the basic levels, does increase, but not exponentially, according to 2022 data:

• The average annual rate for state minimum liability-only coverage is $511.
• The average annual rate for liability coverage with limits of 50/100/50 is $637.
• The average annual rate for full coverage with limits of 100/300/100 and a $500 deductible is $1,682.

To see what the average driver pays for liability coverage in each state, and how much more you would pay to boost your coverage, refer to the table below.

Average driver cost for state minimum vs. basic liability insurance, by state

250/500/100 coverage limits

If you own an expensive home or have a high net worth, consider supplementing this level of coverage with an umbrella liability policy that extends your protection by $1 million or more. It’s relatively cheap – a $1 million umbrella policy costs $150 to $300 yearly, on average, according to the Insurance Information Institute.

Do I need full coverage insurance?

Full coverage comprises comprehensive and collision: Comprehensive insurance pays for damage to your car from severe weather, fire, collisions with animals and theft; collision coverage pays to repair your car if you have an accident, regardless of fault.

If you owe money on your car, your lender requires you to have collision and comprehensive coverage, which would repair or replace your car. Liability insurance pays only for others’ cars. You must choose a deductible amount for collision and comprehensive coverages. Damage below this amount is your responsibility to fix.

Do I need uninsured motorist car insurance?

If you have your own health insurance and you have purchased collision coverage, you may be able to skip uninsured motorist coverage if your state allows it. It is a good idea to keep uninsured motorist coverages if you can afford to as it minimizes financial losses from deductibles and coverage caps.

Furthermore, getting into a crash with an uninsured motorist could spell disaster – in 2019, 12.6 percent of motorists, or about one in eight drivers, were uninsured, according to a 2021 study by the Insurance Research Council.

Your state may require that you buy uninsured motorist bodily injury coverage, which pays your hospital bills if you are hit by an uninsured driver. Your state may require only that you be offered this coverage but allow you to turn it down.

Do I need medical payments or personal injury protection coverage?

Your state, especially if it is a no-fault state, may require that you buy personal injury protection so that your injuries in a car accident are always covered up to your limits, no matter whose fault the accident was. It usually includes coverage for lost wages as well. If you don’t have health insurance, these coverages are recommended.

Medical payments coverage is required by a few states but is optional in most, paying medical expenses up to your limits. If you don’t have your own health insurance coverage, you should consider this coverage. If you have a high-deductible health plan, medical payments may help pay the deductible.

What are some other types of car insurance?

Auto insurance companies also offer a variety of optional coverages. Some may be more useful than others, so it’s important to review your policy and determine which apply to you:

• Gap insurance: If your car is a total loss due to an accident, this coverage option will cover the difference between what you owe on your loan or lease and the actual cash value of the vehicle.
• Roadside assistance coverage: This coverage may be a good choice for people who drive frequently. It covers any service calls and towing expenses if your car breaks down, but it does not pay for vehicle repairs.
• Rental car reimbursement coverage: Pays for a rental car after a covered claim. Adding this endorsement could come in handy if your car is not drivable due to a covered incident.
• Non-owner car insurance: Non-owner car insurance is a form of liability coverage that provides protection for people who don’t own a vehicle but still need to drive someone else’s on occasion. It pays out if you cause injury or property damage in a mishap with another person.
• Mechanical breakdown insurance: If your car runs into trouble for reasons that are not related to an accident, mechanical breakdown insurance (MBI) is there to cover the costs of getting it fixed.
• Rideshare insurance: Personal coverage typically doesn’t apply if you drive for a ridesharing company like Uber or Lyft.

How can I save money on car insurance?

There are a number of ways to save on car insurance. One of the best is to shop around. But it’s important to understand that your driving history and other factors affect your premium.

“Individuals with a poor credit score are regarded as risky investments, which can increase your premium,” Dr. Pangarkar says. “There are other factors that impact your insurance premium, such as the ZIP code where you live; the year, make and model of your car; how many miles you drive annually … your age; etc.”

You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.

The insurance industry is highly competitive and many companies want to acquire new customers from rivals, Dr. Pangarkar says.

Here are some other ways you can save money on your car insurance payments:

• Shop around: You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.
• Look for car insurance discounts: Safe driving, getting good grades, bundling with homeowners policy and installing safety features are a few ways you can get discounts on your car insurance policy.
• Maintain a clean driving record and a good credit score.
• Buy a vehicle that has a good safety record.
• Raise your insurance deductible.

Another way to save money on your car insurance is by signing up for a telematics program to monitor your driving habits.

Pangarkar recommends calling your insurance company and asking for discounts and says that low-mileage auto insurance companies are a good fit and highly beneficial for those consumers who drive less (typically lower than 7,500 miles in a given year). 

“Keep in mind that typically, car insurance companies offer two kinds of discounts for low-mileage consumers. The first is where consumers that drive below a certain threshold qualify (typically 7,500 miles as mentioned earlier,)” Pangarkar says.

“In this first case, companies like Geico and State Farm offer highly competitive rates that can help drivers get substantial discounts. For the second type of discount, which is calculated based on a pay-per-mile rate, many insurance companies like Nationwide, Allstate and Liberty Mutual offer discounts in this category. Many companies use apps to track driving history. Nationwide is a company that is reputed to offer good discounts in the pay-per-mile category.”

Resources & Methodology

Sources

Insurance Information Institute. “Facts + Statistics: Uninsured motorists.” Accessed July 2022.

Methodology

CarInsurance.com commissioned Quadrant Information Services to report average auto insurance rates for nearly every ZIP code in the United States. The rate includes uninsured motorist coverage.

Note: Liberty Mutual, one of the biggest auto insurers in the U.S., is not included in the list of insurers offering cheap car insurance because of a lack of public rate information from the company.

Your rate depends on your personal factors and vehicle.

– Michelle Megna contributed to this story.