To legally drive in most states, you need to have car insurance, with the minimum amount determined by your state of residence. We should really refer to “car insurance minimum coverages,” in plural, because requirements can exist for liability insurance, property damage, medical expenses, uninsured/underinsured coverage, and personal injury protection, among other possibilities. This post will provide a general overview using the most current information available. Verify information for your particular state to make sure you have the appropriate requirements for car insurance.
Car Insurance Requirements By State
Take a look at Alabama’s requirements for car insurance: 25/50/25. This means that the state requires $25,000 of bodily injury liability insurance per person with $50,000 for all bodily injuries that take place within a single accident and $25,000 in property damage per accident. This is the general format we’ll use while adding other insurance information about a state when available and applicable.
|State||Requirements for Car Insurance||Additional Requirements|
|Connecticut||25/50/25||The state also requires uninsured/underinsured motorist coverage of $25,000 per person and $50,000 per accident|
|Delaware||25/50/10||The state also requires personal injury protection (PIP)|
|Florida||Property damage liability of $10,000 per accident and $10,000 PIP coverage|
|Hawaii||20/40/10 and $10,000 PIP|
|Illinois||25/50/20||Under state law, policies automatically include what’s required for uninsured motorist coverages|
|Indiana||25/50/25||This state also requires $50,000 in underinsured motorist coverage for bodily injuries|
|Kansas||25/50/25||Along with uninsured/underinsured coverage ($25,000 per person/$50,000 per accident) and personal injury protection (PIP or no-fault)|
|Maine||50/100/25||Along with $50,000 uninsured coverage per person and $100,000 per accident, and $2,000 in medical payment coverage|
|Massachusetts||20/40/5 and $8,000 PIP|
|Minnesota||30/60/10||Along with $25,000 uninsured/underinsured coverage per person, $50,000 per accident, and $40,000 PIP|
|Missouri||25/50/25||Plus $25,000 uninsured coverage per person and $50,000 per accident|
|Nebraska||25/50/25||Plus $25,000 uninsured/underinsured coverage per person and $50,000 per accident|
|New Jersey||15/30/5||Along with $15,000 PIP|
|New York||25/50/50 and $50,000 PIP|
|North Carolina||30/60/25||The state also has detailed specifics about required insurance coverage for uninsured/underinsured motorists|
|Oregon||25/50/20||Plus $25,000 uninsured coverage per person and $50,000 per accident, and $15,000 PIP|
|Pennsylvania||15/30/5||Plus $5,000 for medical payments|
|South Carolina||25/50/25||Plus $25,000 uninsured coverage per person, $50,000 per accident, and $25,000 in property damage|
|South Dakota||25/50/25||Plus $25,000 uninsured coverage per person and $50,000 per accident|
|Washington D.C.||25/50/10||$25,000 uninsured coverage per person, $50,000 per accident, and $5,000 property damage|
|West Virginia||25/50/25||Plus $25,000 uninsured coverage per person and $50,000 per accident, and $25,000 property damage|
|Wisconsin||25/50/10||Plus $25,000 uninsured coverage per person and $50,000 per accident|
Which States Don’t Require Insurance?
You may notice that two states are not in this list: New Hampshire and Virginia. That’s because they don’t require car insurance, per se, although they do have laws on the subject.
In Virginia, if you don’t have car insurance, you pay a $500 fee, which is more than the average cost of liability insurance in the state.This fee does not, though, provide the driver with any coverage. So they are responsible for any damages they inflict when at fault in an accident and for compensation for any medical injuries and/or property damage.
In New Hampshire, there are no fees associated with not having car insurance but the at-fault driver is responsible for paying for any damages when they are at fault in an accident.
If a driver decides to buy car insurance in either state, then the car insurance minimum coverage in each is 20/50/25.
Recommended: How to Get Car insurance in 5 Simple Steps
Understanding Required Coverages
Here are definitions for key auto insurance terms connected to coverages:
• At fault: A driver is “at fault” when an action they took or didn’t take caused the collision.
• Liability insurance: This pays for the other driver’s/drivers’ car repairs (property damage) and medical bills (bodily injuries) if you’re at fault in an accident.
• Uninsured and underinsured motorist coverage: This protects drivers and passengers alike if the other motorist has little or no car insurance. The bodily insurance portion covers medical costs while the property damage portion pays for vehicle repairs.
• Personal injury protection: This helps to pay for accident-related medical expenses for the insured driver and the passengers, regardless of who is at fault.
Liability auto insurance may also cover loss of income, legal fees if a lawsuit occurs, and/or funeral costs. The property damage coverage can go beyond paying for vehicle repairs, also covering a fence, bicycle, shed, or building — as just four examples — that was damaged in an accident.
Exceptions to State Minimum Car Insurance Requirements
As already described, New Hampshire and Virginia take a different approach to car insurance requirements. As another approach, in the state of Kentucky, a driver can have 25/50/25 coverage or a policy with a $60,000 limit. In Maine, as another example, you can have the menu of coverages as described above or a $125,000 policy. Because each state is different, it’s best to verify what insurance is required by law where you live and what options exist.
In more than half of the states, a driver can decide to purchase a bond from the state instead of buying car insurance. Specifics vary by state (but none of the bond amounts are small) and these funds are used if you cause an accident. Any time that the state pays an injured party (from an accident where you are at fault), the money must immediately be reimbursed by you to the state along with interest. The bond is connected to the driver, not the vehicle, so it provides coverage to any vehicle driven by the bondholder.
Recommended: How Does Car Insurance Work?
Going Beyond Car Insurance Minimum Coverage
So far, this post is focusing on what insurance is required by law. But how much car insurance do you really need? That’s another question entirely.
For example, even when your state doesn’t require comprehensive coverage, if a vehicle is being financed or leased, the lender will likely require that you have this type of coverage. This covers physical damage to a vehicle that isn’t caused by an accident. This can include weather damage, theft or vandalism, hitting an animal, and other damages. Even if a vehicle is paid off, it often makes sense to include this coverage in your policy because the cost is small in comparison to what repair or replacement costs would be if the vehicle is damaged or stolen.
Collision coverage goes beyond accident-related damage and can cover costs if you run into a tree or building, hit a pothole, for example. If paying for damages out of pocket would be challenging or your risk tolerance is low, you might consider having this coverage.
Then there’s guaranteed auto protection (GAP) that can protect you as your vehicle’s value depreciates. If that car is totaled in an accident or stolen, then GAP would pay the difference between what you owe on it and its actual cash value. This allows you to pay off your loan or lease and then get any remainder from the insurer. Typically, you need full auto insurance in order to add the optional GAP.
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Lowering Car Insurance
To lower your car insurance, here are tips to consider:
• Get quotes. Using an online comparison tool can make your search especially efficient. The Insurance Information Institute recommends that you get at least three quotes. To check out the insurer’s financial health, you can use Standard & Poor’s, AM Best, or another rating service — and/or contact your state insurance department to see if there are any complaints about them.
• Talk to your current insurance provider and ask them what discounts they can offer you. They may give you a better premium to keep your business.
• See which discounts you may qualify for: a good driving record, a vehicle with anti-theft features, carpooling/remote working, going paperless with statements, or other strategies.
• Find out how much you can save if you bundle other insurances with your car insurance. This can be homeowners or renters insurance, for example, or perhaps you can combine car insurance policies for multiple vehicles.
• Consider a higher deductible, which is the out-of-pocket amount you’d have to pay before your insurance kicks in to pay a claim. This can lower your premium significantly, but if you have an accident, you may need to use your personal savings before the insurer pays your claim.
• Reevaluate coverage needs. If your car is older, you may not need all of the coverages you once did. That said, you’ll want to balance what you can save today on premiums with what might happen tomorrow if an accident or other covered event occurs. You’ll need to keep state minimum car insurance in mind, of course.
Most states have minimum requirements for car insurance (and when they don’t, they still have coverage parameters that must be met). This post shares insight into the types of coverages as well as the amounts that each state requires. To find the right insurance policy for your needs, you can compare multiple car insurance rates from top insurers and see quotes in just a matter of minutes.
Photo credit: iStock/Weekend Images Inc.
¹SoFi’s Insights tool offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. Vehicle Identification Number is confirmed by LexisNexis and car values are provided by J.D. Power. Auto Tracker is provided on an “as-is, as-available” basis with all faults and defects, with no warranty, express or implied. The values shown on this page are a rough estimate based on your car’s year, make, and model, but don’t take into account things such as your mileage, accident history, or car condition.
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