How much coverage should you have on car insurance?

[GrantAnn]

Adequate car insurance coverage typically exceeds state minimums, with industry experts commonly recommending liability limits of $100,000/$300,000/$100,000 or higher to protect personal assets. The precise amount you need hinges on your financial assets, whether your vehicle is financed, and your state’s legal requirements. Relying solely on low state minimums, which can be as limited as $25,000/$50,000/$25,000, exposes you to significant financial risk in a serious at-fault accident.

Your liability coverage is the most critical component. It pays for injuries and property damage you cause to others. Market data indicates that the average bodily injury liability claim now exceeds $20,000, and property damage claims often surpass $5,000. With the high cost of modern vehicles and medical care, a $25,000 property damage limit can be exhausted by a single collision with a mid-range SUV. For asset protection, policies with $100,000/$300,000 bodily injury and $100,000 property damage limits are a widely advised baseline. High-net-worth individuals often supplement this with a personal umbrella policy for an extra $1 million or more in coverage.

If you lease or finance your car, the lender will require you to carry both collision and comprehensive coverage. Once you own the vehicle outright, the decision to keep this coverage is financial. A common rule of thumb is to consider dropping it if the annual premium exceeds 10% of your car’s current market value. For a car worth $5,000, if your combined collision and comprehensive premium is over $500, you might opt to self-insure.

Uninsured/Underinsured Motorist (UM/UIM) coverage is essential, as industry reports suggest over 10% of drivers in some regions are uninsured. This coverage protects you and your passengers if hit by a driver with insufficient or no insurance. It is inexpensive relative to the protection it offers.

The following table summarizes common coverage recommendations based on different financial situations:

Driver & Asset Profile	Recommended Bodily Injury Liability (per person/per accident)	Recommended Property Damage Liability	Notes
Minimum Legal (High Risk)	State Minimum (e.g., $25k/$50k)	State Minimum (e.g., $25k)	Only satisfies the law; offers minimal asset protection.
Average Driver with Savings	$100,000 / $300,000	$100,000	The standard recommendation for protecting home equity and savings.
Homeowner / Higher Assets	$250,000 / $500,000	$100,000	Provides a stronger safety net. Often paired with an umbrella policy.
Leased/Financed Vehicle	$100,000 / $300,000 (or per lender)	$100,000	Collision & Comprehensive are mandatory. Liability should still be robust.

Ultimately, assess your personal risk tolerance. High annual mileage, a long commute in dense traffic, or a history of claims are strong reasons to opt for more comprehensive coverage. Regularly review your policy during renewal to ensure it aligns with changes in your vehicle’s value and your financial situation.

[DelOlivia]

I learned this the hard way. Years ago, I carried only my state’s minimum. Then I rear-ended a fairly new luxury sedan at a stoplight. My $25,000 property damage limit was gone in an instant, just covering the other car’s repairs. I had to pay thousands more out of pocket. My agent told me later that bumping my liability to 100/300/100 would have cost me less than $150 more per year. Now I see insurance not as a legal checkbox, but as a shield for my savings account. If you have anything to lose—a house, retirement funds—skimping on liability is a gamble you don’t want to take.

[DelMarley]

Let’s break this down without the jargon. Think of your liability coverage as your “oops, I messed up” fund. If you cause a crash, this pays for the other person’s hospital bills and car fix. State minimums are pathetically low—sometimes just $25,000 for car damage. Have you seen car prices lately? That won’t cover a fender-bender on a new truck.

So, what’s a good number? Most folks I talk to are safe with 100/300/100. That means $100,000 per person for injuries, up to $300,000 per accident, and $100,000 for stuff you hit.

If your car is leased or you’re still making payments, the bank owns it. They’ll force you to get collision (for crashes) and comprehensive (for theft, hail) coverage. Once you finally own the title, you can decide if it’s still worth the premium.

Don’t forget the “UM” coverage. It’s for when the other guy is at fault but has no insurance or lousy limits. It’s cheap and covers your medical bills.

[MaddoxLynn]

As a homeowner, my perspective on auto insurance shifted completely. My insurance advisor framed it simply: my auto policy is the first line of defense for all my assets. A severe at-fault accident could lead to a lawsuit that targets not just my policy limits but my home equity and investments.

I immediately increased my liability from the standard 100/300 to 250/500. The annual cost increase was minimal, maybe two nice dinners out. I also added a $1 million personal umbrella policy. This umbrella sits over both my auto and homeowner’s policies, kicking in once their limits are exhausted.

For me, coverage isn’t about the car; it’s about protecting the life I’ve built around it. The peace of mind knowing my family’s financial future is insulated from a single traffic mistake is worth every penny.

[VanElias]

Choosing coverage is a personal risk management equation. Start with the non-negotiable: your state’s legal minimum. This is your absolute floor. Next, factor in contractual obligations. If there’s a lienholder on your vehicle title, they mandate collision and comprehensive coverage.

Now, analyze your exposure. The core risk is liability. List your major assets: home equity, savings, investments, even future income can be garnished in some states. Your liability limits should at least match your total exposure. For many, this points toward the 100/300/100 benchmark.

Then, consider risk probability. Do you drive daily in heavy traffic? Is your area prone to hail or flooding? These factors make comprehensive and collision more valuable. Conversely, driving an old, low-value car reduces the financial rationale for these coverages.

Finally, insure against others’ irresponsibility with Uninsured Motorist coverage. The premium is low, and the risk of encountering an uninsured driver is statistically significant. Review this plan annually; your car depreciates, but your asset profile may grow, requiring liability limit adjustments.