When it comes to driving and owning a vehicle, almost all states require you to carry car insurance so that both you, your vehicle, your lender, and other drivers are covered should an accident occur.
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Why Is Car Insurance Mandatory
Car insurance is mandatory in almost all states to protect both drivers and vehicle lenders. Most requirements focus on liability insurance, which is for when you’re responsible or at fault, and it helps pay for property damage or injuries you have caused to someone else. Some states also require coverage for medical bills you and any passengers in your vehicle incur.
Your state might not be the only entity requiring auto insurance coverage. Your lender will require some form of insurance policy if you have a loan on your vehicle. Similarly, your leaseholder will insist you have insurance if you lease a vehicle. In most situations, you’ll have to carry more insurance than your state’s minimum requirement if you have a lease or a loan. Comprehensive coverage and collision coverage are common types of required insurance with leases and loans because protecting the vehicle’s value is a high priority in these situations.
State Minimum Requirements
All 50 states have set minimum insurance requirements, but there are ways to opt out of those requirements in Virginia and New Hampshire. The requirements are not uniform, so it’s best to check what your state requires, as you must meet your state’s requirements to be a legal driver.
Car Insurance Provides Financial Protection
Car insurance provides financial protection in a few different ways, depending on the type of insurance you have. Regarding liability, your insurance pays for the damage you’ve caused to another person’s property, or it pays their medical bills. Without liability coverage, you’ll be responsible for these bills yourself.
Collision and comprehensive coverage offer protection for your vehicle and pay for covered damages after you pay the deductible. With collision and comprehensive policies, adding gap insurance can pay the balance of a loan if your vehicle is totaled or stolen and you still owe more than its depreciated value.
It May Be Required by Your Lender
If you have a car loan, your lender will require you to carry certain types of insurance. They consider your vehicle collateral on the loan. This means that they will repossess your vehicle if you stop making loan payments, so they want to be sure that it holds its value.
Most lenders require “full coverage,” which means you have comprehensive, collision, and liability insurance.
Protection From the Cost of Repairs
Car insurance does not pay for routine maintenance or mechanical breakdowns but will help pay for repairs caused by a covered event. Specifically, collision insurance helps pay for repairs if your car is damaged in an accident. Comprehensive insurance covers repair bills for fire, theft, vandalism, natural disasters, falling objects, and if you hit an animal.
Auto Insurance Offers Protection For Your Passengers
Some states require personal injury protection (PIP) insurance. It’s a good idea to have this insurance, if it’s offered in your state, as it provides coverage for your passengers.
Medical coverage and uninsured/underinsured motorist coverage also offer some protection for passengers in your vehicle. Medical coverage is often paired with collision and comprehensive policies. Underinsured and uninsured coverage is required in some states and optional in others. These insurance policies protect you if the at-fault driver has no insurance or does not have enough insurance to cover expenses.
Auto Insurance Offers Protection for You
PIP, medical coverage, and underinsured/uninsured motorist insurance policies protect you as the driver or the policyholder if there’s an accident. Personal injury protection can be beneficial because it not only pays for your direct and indirect medical expenses, but it may also cover lost wages and other related expenses as you recover.
Where Is Car Insurance Required?
All 50 states have a minimum level of liability insurance that’s required. That minimum level varies by state, and it’s just a minimum. You can get more insurance to protect yourself, your vehicle, and your finances.
In Virginia, you can opt out of purchasing minimum coverage by paying a $500 uninsured motor vehicle fee. You must abide by Virginia’s minimum requirements if you do not pay the fee.
The New Hampshire Financial Responsibility Act requires drivers to prove they have sufficient funds in case there is an accident and they’re at fault. You do not have to get car insurance if you can do that. If you cannot, you’ll have to comply with state requirements.
State | Minimums |
$25,000 bodily injury liability limit per person $50,000 maximum for all bodily injuries per accident $25,000 maximum for property damage per accident | |
$50,000/$100,000 for bodily injury or death $25,000 for property damage | |
$25,000 bodily injury liability for 1 person $50,000 for 2 or more persons $15,000 property damage liability | |
$25,000 for bodily injury or death of 1 person in any 1 accident $50,000 for bodily injury or death of 2 or more persons in any 1 accident $25,000 for damage to or destruction of the property of others | |
$15,000 for injury/death to 1 person $30,000 for injury/death to more than 1 person $5,000 for damage to property | |
$25,000 for bodily injury or death to any 1 person in an accident $50,000 for bodily injury or death to all persons in any 1 accident $15,000 for property damage in any 1 accident | |
$25,000 per person$50,000 per accident for bodily injury liability $25,000 per accident for property damage liability | |
$25,000 for bodily injury or death of 1 person $50,000 for bodily injury or death of 2 or more persons $10,000 for injury to or destruction of property of others | |
$10,000 minimum limit of bodily injury liability per person $20,000 per crash $10,000 property damage liability per crash | |
$25,000 per person Bodily Injury Liability $50,000 per incident $25,000 per incident Property Damage Liability | |
$20,000 per person $40,000 per accident bodily injury liability $10,000 per occurrence property damage liability | |
$25,000 per person Bodily Injury Coverage $50,000 per accident Bodily Injury Coverage $15,000 in Property Damage Liability coverage | |
$25,000 for injury or death of 1 person in an accident $50,000 for injury or death of more than 1 person in an accident $20,000 for damage to property of another person | |
$25,000 for bodily injury to or the death of 1 individual $50,000 for bodily injury to or the death of 2 or more individuals in any 1 accident $25,000 for damage to or the destruction of property in 1 accident | |
$20,000 of bodily injury to or death of 1 person in any 1 accident $40,000 because of bodily injury to or death of 2 or more persons in any 1 accident $15,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000/person for bodily injury $50,000/accident for bodily injury $25,000/accident for property damage | |
$25,000 for all claims for bodily injury damages sustained by any 1 person $50,000 for all bodily injury damages sustained by all persons as a result of an accident $25,000 for all property damage as a result of any 1 accident | |
$15,000 for bodily injury to 1 person $30,000 for bodily injury to more than 1 person in a single accident $25,000 coverage for damage to some1 else’s vehicle or other property | |
$50,000 liability for the injury to or death of any 1 person $100,000 liability for 1 accident resulting in injury to or death of more than 1 person $25,000 liability for property damage | |
$30,000 for bodily injury $60,000 for 2 or more people $15,000 property damage | |
$20,000 per person – Bodily Injury to Others $40,000 per accident – Bodily Injury to Others $5,000 per accident – Damage to Some1 Else’s Property | |
$50,000 for a person who is hurt or killed in an accident $100,000 for each accident if several people are hurt or killed $10,000 for property damage in another state | |
$30,000 for injuries to 1 person $60,000 for injuries to 2 or more people $10,000 for physical damage to the other driver’s vehicle or for damage to property | |
$25,000 per person (limited to a single accident) $50,000 per accident for bodily injury $25,000 per accident for property damage | |
$25,000 per person for bodily injury $50,000 per accident for bodily injury $25,000 per accident for property | |
$25,000 because of bodily injury to or death of 1 person in any 1 accident and subject to the limit for 1 person $50,000 because of bodily injury to or death of 2 or more persons in any 1 accident $20,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000 because of bodily injury to or death of 1 person in any 1 accident $50,000 because of bodily injury to or death of 2 or more persons in any 1 accident $25,000 because of injury to or destruction of property of others in any 1 accident | |
$25,000 for bodily injury or death of 1 person in any 1 accident $50,000 for bodily injury or death of 2 or more persons in any 1 accident $20,000 for injury to or destruction of property of others in any 1 accident | |
$25,000 per person for bodily injury $50,000 if 2 or more persons are hurt $25,000 for property damage | |
$15,000 per person – bodily injury liability $30,000 per accident – bodily injury liability $5,000 per accident – property damage liability | |
$25,000 for bodily injury to or death of 1 person $50,000 for bodily injury to or death of 2 or more persons $10,000 for property damage in any 1 accident | |
$25,000 for bodily injury and $50,000 for death for a person involved in an accident $50,000 for bodily injury and $100,000 for death for 2 or more people in an accident $10,000 for property damage for a single accident | |
$30,000 Bodily injury (1 person) $60,000 Bodily injury (2 or more people) $25,000 Property damage | |
$25,000 per person (the maximum amount payable to 1 person) $50,000 per accident (the maximum amount payable to all people injured in 1 accident) $25,000 per accident – property damage liability | |
$25,000 for injury/death of 1 person $50,000 for injury/death of 2 or more people $25,000 for property damage in an accident | |
$25,000 of bodily injury protection per person $50,000 per accident $25,000 of property damage protection | |
$25,000 per person $50,000 per crash for bodily injury to others $20,000 per crash for damage to others’ property | |
$15,000 for injury or death of 1 person in an accident $30,000 for injury or death of more than 1 person in an accident $5,000 for damage to property of another person | |
$25,000 bodily injury liability per person $50,000 bodily injury liability per accident $25,000 property damage liability per accident | |
$25,000 per person for bodily injury $50,000 for all persons injured in 1 accident $25,000 for all property damage in 1 accident | |
$25,000 bodily injury liability insurance per person $50,000 total bodily injury liability per accident $25,000 property damage liability per accident | |
$25,000 for each injury or death per accident $50,000 for total injuries or deaths per accident $15,000 for property damage per accident | |
$30,000 of coverage for injuries per person $60,000 per accident $25,000 of coverage for property damage | |
$25,000 because of liability for bodily injury to or death of 1 person $65,000 because of liability for bodily injury to or death of 2 or more persons arising out of the use of a motor vehicle in any 1 accident $15,000 because of liability for injury to, or destruction of, property of others arising out of the use of a motor vehicle in any 1 accident | |
$25,000 for 1 person $50,000 for 2 or more persons killed or injured $10,000 for damages to property in any 1 crash | |
$30,000 Injury or death of 1 person $60,000 Injury or death of 2 or more people $20,000 Property damage | |
$25,000 for injuries or death to another person $50,000 for injuries or death to all other people $10,000 for damage to another person’s property | |
$25,000 per person$50,000 per accident $10,000 Property Damage Liability | |
$25,000 for 1 crash, 1 injury $50,000 for 1 crash, 2 or more injuries $25,000 for property damage | |
$25,000 for the injury or death of 1 person $50,000 for the injury or death of more than 1 person $10,000 for property damage | |
$25,000 bodily injury 1 person $50,000 bodily injury per accident $20,000 property damage liability |
How Much Car Insurance Do You Have to Have?
You’ll have to determine your state’s requirements to calculate how much auto insurance you need. Insurance requirements are not universal.
Some states have an at-fault approach to auto insurance laws, and others use no-fault laws. In at-fault states, the driver responsible for the accident is held financially accountable. In a no-fault state, both drivers submit a claim to their insurance provider, and then the insurance companies determine fault and liability.
Your state will list minimum liability coverage as a set of three numbers. For instance, Alabama’s minimum liability is 25/50/25. These numbers reflect bodily injury liability per person/bodily injury liability per accident/property damage liability per accident. This means in Alabama, you’re required to have $25,000 bodily injury liability per person, $50,000 maximum for all bodily injuries in one accident and $25,000 in coverage for property damage per accident.
How Can I Calculate How Much Insurance I Need?
The first step in determining your auto insurance needs is checking what your state requires. Then, add the amounts your lender or lessor needs you to carry. That’s your base number, but you might want to add more coverage.
Your finances play a significant role in calculating your insurance needs. Carrying the highest amount of liability you can afford is a great idea, as it can protect your financial health if you cause an accident.
The age and value of your vehicle are other considerations. If you have a newer vehicle, you’ll want comprehensive and collision coverage to replace or repair it if there’s an accident. An old, beat-up car does not need as much insurance because there’s not a lot of value in the vehicle.
Finally, consider your driving habits and where you live. Are you in a rural area and stand a good chance of hitting a deer? Or do you live in the city and walk just about everywhere? These factors can play a big role in your insurance decisions.
What Happens if I Don’t Get Insurance?
Driving without auto insurance can have various ramifications, depending on your situation and location. Some states will issue you a small fine, while the fines are much higher in other states. If you’re repeatedly caught driving without proof of insurance, you can face jail time, have your vehicle impounded, or have your driving privileges suspended or revoked.
Accidents without auto insurance are even worse as the expenses mount quickly. If you’re at fault, you will be responsible for some, if not all, of the costs to your vehicle and any other party’s vehicle, property, and medical bills. This can be financially devastating and have long-lasting repercussions. Getting adequate auto insurance is one of the best steps to protect yourself on the road.