How Much Car Insurance Do You Really Need?

What’s the deal with car insurance? How much do you actually need, and what policies should you consider? 

Here we put car insurance in terms that are easy to understand. You’ll be confident in your coverage in no time.

What is a deductible? 

A car insurance deductible is the amount of money you pay out of pocket before an insurance provider covers your claim’s cost. For example, if you get into an accident with damages that cost $2,000, you will pay your insurance company your deductible fee before covering the rest of the claim cost. Say your deductible is $500. You will pay $500, and the insurance company will cover the remaining $1,500 of damage. 

Usually, deductibles work on a per claim basis. If you get into two different fender benders within two months of each other, you will have to pay the deductible twice. 

In contrast, if you have a $1,000 deductible and only need $500 in repairs, you are responsible for covering the full damage cost. 

What is a car insurance premium? 

Your premium is the amount you pay annually to your car insurance provider. Insurers charge monthly, quarterly, semiannually, or annually. 

What are premiums based on?

• You age 
• Your driving history
• Car make and model
• Car age
• Type of insurance you purchase

What kinds of coverage do car insurance companies offer? 

• Liability: This coverage is usually required by law. There are two types; bodily injury and property damage. 
• Collision: It’s typically optional, but your lender may require it if you are leasing or paying off your vehicle. 
• Comprehensive: Comprehensive may help cover damage to your car from things like theft, fire, hail, or vandalism.
• Uninsured/underinsured: This may help If you're hit by a driver who doesn't have insurance.

• Medical payments: Helps pay for costs associated with the injuries.

• Personal injury protection: PIP is only available in some states. 

• Gap coverage: Helps pay off your auto loan if your car is totaled or stolen and you owe more than the car's depreciated value (optional). 

• Rental reimbursement: This helps pay for rental car expenses or public transportation fares if you are involved in an accident. 
• New car replacement: If you own a new car this coverage, it can help replace it if it gets totaled in an accident. 
• Towing and labor cost: This is a common add-on. 

Coverage limit 

A coverage limit is the maximum amount of money your insurance policy will pay for the different types of coverage you have. You can ensure that you have the maximum amount of coverage by working with an insurance agent. 

If you go over the limit, you are responsible for the outstanding costs. 

How much coverage do you need? 

There is no national rule that declares how much car insurance you need. Most states require you to have minimum coverage. Each state's requirements vary. 

Some states only require liability insurance, while other states may require certain additional medical coverage. Comprehensive and collision coverage is optional in every state. You may want to consider investing in these two types because they offer valuable protection or are covered by liability insurance. 

State car insurance coverage requirements 

Looking for a list of what each state requires for car insurance? Look no further!

The chart abbreviations are as follows:

• BI: Bodily injury insurance (a facet of liability insurance)
• PD: Property damage liability (a facet of liability insurance)
• UIM BI: Uninsured/underinsured motorist bodily injury insurance
• UIM PD: Uninsured/underinsured motorist property damage insurance

States including Delaware, Florida, Hawaii, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, North Dakota, Oregon, Pennsylvania, and Utah also require personal injury protection (PIP) coverage. 

Bodily injury insurance

State

BI

UIM BI

Alabama

$25,000/$50,000

Not Required

Alaska

$50,000/$100,000

Not Required

Arizona

$25,000/$50,000

Not Required

Arkansas

$25,000/$50,000

Not Required

California

$15,000/$30,000

Not Required

Colorado

$25,000/$50,000

Not Required

Connecticut

$25,000/$50,000

$25,000/$50,000

Delaware

$25,000/$50,000

Not Required

Florida

Not Required

Not Required

Georgia

$25,000/$50,000

Not Required

Hawaii

$20,000/$40,000

Not Required

Idaho

$25,000/$50,000

Not Required

Illinois

$25,000/$50,000

$25,000/$50,000

Indiana

$25,000/$50,000

Not Required

Iowa

$20,000/$40,000

Not Required

Kansas

$25,000/$50,000

$25,000/$50,000

Kentucky

$25,000/$50,000

Not Required

Louisiana

$15,000/$30,000

Not Required

Maine

$50,000/$100,000

$50,000/$100,000

Maryland

$30,000/$60,000

$30,000/$60,000

Massachusetts

$20,000/$40,000

$20,000/$40,000

Michigan

$50,000/$100,000

Not Required

Minnesota

$30,000/$60,000

$25,000/$50,000

Mississippi

$25,000/$50,000

Not Required

Missouri

$25,000/$50,000

$25,000/ $50,000

Montana

$25,000/$50,000

Not Required

Nebraska

$25,000/$50,000

$25,000/$50,000

Nevada

$25,000/$50,000

Not Required

New Hampshire

$25,000/$50,000

$25,000/$50,000

New Jersey

$15,000/$30,000

$15,000/$30,000

New Mexico

$25,000/$50,000

Not Required

New York

$25,000/$50,000

$25,000/$50,000

North Carolina

$30,000/$60,000

$30,000/$60,000

North Dakota

$25,000/$50,000

$25,000/$50,000

Ohio

$25,000/$50,000

Not Required

Oklahoma

$25,000/$50,000

Not Required

Oregon

$25,000/ $50,000

$25,000/$50,000

Pennsylvania

$15,000/ $30,000

Not Required

Rhode Island

$25,000/ $50,000

Not Required

South Carolina

$25,000/$50,000

$25,000/ $50,000

South Dakota

$25,000/$50,000

$25,000/ $50,000

Tennessee

$25,000/$50,000

Not Required

Texas

$30,000/$60,000

Not Required

Utah

$25,000/$65,000

Not Required

Vermont

$25,000/$50,000

$50,000/ $100,000

Virginia

$25,000/$50,000

$25,000/ $50,000

Washington

$25,000/$50,000

Not Required

Washington D.C

$25,000/$50,000

$25,000/ $50,000

West Virginia

$25,000/$50,000

$25,000/ $50,000

Wisconsin

$25,000/$50,000

$25,000/ $50,000

Wyoming

$25,000/$50,000

Not Required

BI and UIM BI amounts are per person/per accident

Property damage insurance

State

PD

UIM PD

Alabama

$25,000

Not Required

Alaska

$25,000

Not Required

Arizona

$15,000

Not Required

Arkansas

$25,000

Not Required

California

$5,000

Not Required

Colorado

$15,000

Not Required

Connecticut

$25,000

Not Required

Delaware

$10,000

Not Required

Florida

$10,000

Not Required

Georgia

$25,000

Not Required

Hawaii

$10,000

Not Required

Idaho

$15,000

Not Required

Illinois

$20,000

Not Required

Indiana

$25,000

Not Required

Iowa

$15,000

Not Required

Kansas

$25,000

Not Required

Kentucky

$25,000

Not Required

Louisiana

$25,000

Not Required

Maine

$25,000

Not Required

Maryland

$15,000

$15,000

Massachusetts

$5,000

Not Required

Michigan

$10,000

Not Required

Minnesota

$10,000

Not Required

Mississippi

$25,000

Not Required

Missouri

$10,000

Not Required

Montana

$20,000

Not Required

Nebraska

$25,000

Not Required

Nevada

$20,000

Not Required

New Hampshire

$25,000

$25,000

New Jersey

$5,000

Not Required

New Mexico

$10,000

Not Required

New York

$10,000

Not Required

North Carolina

$25,000

$25,000

North Dakota

$25,000

Not Required

Ohio

$25,000

Not Required

Oklahoma

$25,000

Not Required

Oregon

$20,000

Not Required

Pennsylvania

$5,000

Not Required

Rhode Island

$25,000

Not Required

South Carolina

$25,000

$25,000

South Dakota

$25,000

Not Required

Tennessee

$15,000

Not Required

Texas

$25,000

Not Required

Utah

$15,000

Not Required

Vermont

$10,000

$10,000

Virginia

$20,000

$20,000

Washington

$10,000

Not Required

Washington D.C

$10,000

$5,000

West Virginia

$25,000

$25,000

Wisconsin

$10,000

Not Required

Wyoming

$20,000

Not Required

PD and UIM PD amounts are per accident

How to pick an insurance provider 

Now that you know which states require what coverage, you’re ready to choose an insurance provider. There are copious factors that go into that decision. Don’t go into it alone. Use Squeeze to assist you in choosing the best car insurance for you! 

Squeeze will compare car insurance rates for you. Even once you pick an insurance provider, the service will continue searching for the best deals. 

Takeaway 

It’s important to understand how car insurance works so you don’t get caught paying more on bills than you have to. Now that you understand exactly how much coverage you need, finding the right provider should be simple. 

Take car insurance by the horns. Find the best deals and personalized options using Squeeze. 

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