Do I Need More Than Minimum Car Insurance?

What State Minimum Car Insurance Covers

Typical state minimum requirements (example: 25/50/25):

Liability coverage only: • $25,000 bodily injury per person: Maximum paid for one person's injuries in an accident you cause • $50,000 bodily injury per accident: Maximum paid for all injuries in one accident you cause • $25,000 property damage: Maximum paid for property you damage

What minimum insurance does NOT include: • Collision coverage: Repairs to your car after an accident (regardless of fault) • Comprehensive coverage: Repairs for theft, vandalism, weather, animal strikes • Uninsured/underinsured motorist coverage: Protection if you're hit by someone without adequate insurance • Medical payments (MedPay): Your medical expenses after an accident • Personal injury protection (PIP): Medical expenses and lost wages (required in no-fault states) • Rental reimbursement: Rental car while yours is being repaired • Roadside assistance: Towing, jump-starts, flat tire service

What this means: Minimum insurance covers only the damages you cause to others. It provides zero protection for your own vehicle or injuries.

State variations: Some states require higher minimums or additional coverages: • Higher liability: Some states require 50/100/50 or more • PIP required: 12 no-fault states mandate PIP • Uninsured motorist: Some states require UM/UIM coverage

Check your state's specific requirements, but even higher state minimums may not be adequate. For details, see our state-by-state guide on minimum car insurance requirements.

Why Minimum Insurance Is Almost Never Enough

1. Medical costs exceed minimums instantly

Real costs of injuries: • Emergency room visit: $1,500-3,000 • Ambulance: $500-1,500 • Hospital stay (3 days): $30,000+ • Surgery: $20,000-150,000 • Severe injuries (brain, spine): $500,000-$2 million+ • Fatality claims: $1 million-$10 million+

One moderately injured person can easily exceed $25,000. Multiple injuries, severe trauma, or fatalities result in claims far beyond minimum limits.

Example: You cause an accident injuring two people: • Person 1: $75,000 medical bills • Person 2: $50,000 medical bills • Your 25/50/25 coverage pays: $50,000 total (max per-accident limit) • You owe out-of-pocket: $75,000

This can lead to wage garnishment, property liens, and decades of financial hardship.

2. Vehicle costs have skyrocketed

Average vehicle values (2024): • New car average: $48,000 • Used car average: $28,000 • Luxury/premium vehicles: $60,000-100,000+ • Electric vehicles: $50,000-80,000

If you hit a newer vehicle, $25,000 property damage coverage may not cover it. Hit two vehicles or damage a building? You're personally liable for the rest.

Example: You cause a multi-car accident: • Vehicle 1: $35,000 damage • Vehicle 2: $28,000 damage • Fence/property: $8,000 damage • Total property damage: $71,000 • Your 25/50/25 coverage pays: $25,000 • You owe: $46,000

3. Your car isn't covered at all

Minimum insurance provides zero coverage for your vehicle: • You're at fault: You pay 100% of your repairs • Other driver is at fault but uninsured: You pay 100% of your repairs (no uninsured motorist property damage) • Hit-and-run: You pay 100% • Theft: You pay 100% • Vandalism, weather, fire: You pay 100%

If your car is worth more than a few thousand dollars, one accident or theft can be financially devastating.

4. You're vulnerable to uninsured drivers

Approximately 12-14% of drivers are uninsured. If an uninsured driver hits you: • Without uninsured motorist coverage: You sue the at-fault driver (who likely has no money) or pay for everything yourself • Your medical bills: Out-of-pocket or through health insurance • Your vehicle repairs: Out-of-pocket • Lost wages: Uncompensated

Minimum policies typically don't include uninsured/underinsured motorist coverage, leaving you exposed.

5. Asset protection is critical

If you have any assets—home equity, savings, retirement accounts, future earnings—minimum insurance won't protect them.

What's at risk: • Home equity: Liens can be placed on your property • Savings and investments: Can be seized to pay judgments • Wages: 10-25% can be garnished for years or decades • Retirement accounts: Some states allow seizure of retirement funds • Inheritance: Future inheritances can be claimed by creditors

One serious accident can wipe out everything you've worked for.

When Minimum Insurance Might Be Acceptable

Very limited situations where minimum insurance could work:

1. You have no assets and minimal income • No home equity • No savings or investments • No retirement accounts • Low income ($25,000-30,000 or less) • No significant future earning potential • "Judgment-proof" (nothing for creditors to take)

Even then: You're still at risk for wage garnishment and future asset seizure. If your financial situation improves, you'll still owe past judgments.

2. Your car is old and low-value • Worth $2,000 or less • High mileage, significant wear • Not economical to repair

If your car isn't worth much, collision and comprehensive coverage may not be cost-effective. However, you still need adequate liability coverage to protect yourself.

3. You're temporarily without income or in extreme financial hardship

If you're between jobs, experiencing financial crisis, or temporarily cannot afford more coverage, minimum insurance is better than no insurance. But: • Increase coverage as soon as financially possible • Consider higher deductibles to lower premiums while maintaining better liability limits • Shop for better rates • Explore payment plans or discounts

Why minimum is still risky even in these cases: • Future wages can be garnished even if you're currently low-income • A single accident can result in decades of financial consequences • Minimum coverage is only $10-20/month cheaper than recommended coverage

Bottom line: Minimum insurance is appropriate for less than 5% of drivers. If you can afford anything more, you should carry it.

What You Should Have Instead of Minimum Insurance

Recommended coverage for most drivers:

Liability: 100/300/100 • $100,000 bodily injury per person • $300,000 bodily injury per accident • $100,000 property damage • Cost: Typically $150-300/year more than state minimums

Why 100/300/100: • Covers most accidents involving serious injuries • Protects against expensive vehicle damage • Industry-standard recommendation • Affordable protection for middle-income drivers

Collision and comprehensive (if your car is worth $3,000+) • Collision: Covers damage to your car in accidents (regardless of fault) • Comprehensive: Covers theft, vandalism, weather, animals • Deductible options: $500, $1,000, $1,500 (higher deductible = lower premium) • Cost: Varies by vehicle value, location, driving record

Why you need it: • Protects your investment in your vehicle • Ensures you can afford repairs or replacement after incidents • Provides peace of mind

Uninsured/underinsured motorist coverage • Covers your injuries and damages if hit by an uninsured or underinsured driver • Typical limits match liability (100/300) • Cost: $50-150/year

Why you need it: • 12-14% of drivers are uninsured • Many drivers carry only state minimums (underinsured) • Protects you from others' inadequate coverage

Optional but valuable: • Medical payments (MedPay): $1,000-10,000 ($20-40/year) • Rental reimbursement: $30-50/day ($20-40/year) • Roadside assistance: $50-100/year

Total cost comparison: • State minimum (25/50/25): $400-600/year • Recommended coverage (100/300/100 + collision/comprehensive + UM): $900-1,800/year • Difference: $500-1,200/year ($40-100/month)

For an extra $40-100/month, you gain comprehensive protection that can save you hundreds of thousands in a serious accident.

Real-World Scenarios: Minimum vs. Adequate Coverage

Scenario 1: Multi-vehicle accident (you're at fault)

Damages: • Vehicle 1: $32,000 damage + $60,000 medical • Vehicle 2: $25,000 damage + $40,000 medical • Total: $157,000

With minimum coverage (25/50/25): • Insurance pays: $75,000 • You owe: $82,000 out-of-pocket • Financial impact: Wage garnishment, property liens, potential bankruptcy

With 100/300/100 coverage: • Insurance pays: $157,000 • You owe: $0 • Financial impact: None (beyond premium increase)

Scenario 2: Your car is totaled (other driver's fault, but they're uninsured)

Your car value: $18,000 Your medical bills: $12,000 Total: $30,000

With minimum coverage (no collision, no UM): • You sue the other driver (who has no assets) • You pay: $30,000 out-of-pocket • You have no car and $30,000 in debt

With collision + UM coverage: • Collision pays: $18,000 (minus deductible) • UM pays: $12,000 medical • You pay: $500-1,000 deductible • You get a replacement car check and medical bills covered

Scenario 3: Theft

Your car is stolen (never recovered), value: $22,000

With minimum coverage (no comprehensive): • Insurance pays: $0 • You still owe your car loan: $22,000 • You have no car and must continue loan payments

With comprehensive coverage: • Insurance pays: $22,000 (minus deductible) • Loan is paid off • You receive remaining funds for replacement vehicle

Scenario 4: Serious injury accident (you're at fault)

Damages: $850,000 (severe injuries to other driver)

With minimum coverage (25/50/25): • Insurance pays: $25,000 (per-person limit) • You owe: $825,000 • You face decades of wage garnishment, lose your home, and may declare bankruptcy (though injury judgments may not be dischargeable)

With 250/500/100 + $1M umbrella: • Insurance pays: $850,000 • You owe: $0 • Your assets and future are protected

How to Afford More Than Minimum Insurance

If cost is a concern, here's how to get better coverage without breaking the bank:

1. Increase your liability limits first Prioritize liability over collision/comprehensive. Liability protects your financial future; collision/comprehensive protects your car. If you must choose, protect your assets first.

2. Raise your deductibles • Increase collision/comprehensive deductibles from $500 to $1,000 • Savings: $200-400/year • You pay more out-of-pocket in a claim, but you reduce premiums

3. Drop collision/comprehensive on old cars • If your car is worth less than $3,000-5,000, collision and comprehensive may not be cost-effective • Keep liability, UM, and other coverages

4. Bundle policies • Combine auto and home/renters insurance with the same company • Savings: 10-25% on both policies

5. Shop around aggressively • Get quotes from at least 5 companies • Rates vary dramatically between insurers • Potential savings: 20-50% by switching

6. Ask about discounts • Good driver, good student, multi-car, defensive driving, low mileage, paperless billing • Total discount potential: 20-40%

7. Improve your credit score • Insurance companies use credit-based insurance scores • Better credit = lower premiums (in most states)

8. Drive less or carpool • Low-mileage discounts (under 7,500-10,000 miles/year) • Usage-based insurance programs

9. Pay annually instead of monthly • Avoid monthly installment fees (often $3-10/month) • Savings: $36-120/year

10. Revisit your coverage annually • As your car depreciates, adjust collision/comprehensive • Shop for better rates every year

The Bottom Line: Minimum Insurance Is Risky

Why nearly everyone needs more than minimum:

Financial devastation from one accident: A single serious crash can result in hundreds of thousands in out-of-pocket costs, wage garnishment, property liens, and bankruptcy.

Minimal cost difference: Upgrading from minimum to recommended coverage (100/300/100 + collision/comprehensive) costs $40-100/month—a small price for comprehensive protection.

Asset protection: If you have any assets, income, or future earning potential, you need coverage that protects them.

Peace of mind: Knowing you're protected from financial catastrophe is invaluable.

Your decision framework: • Do you have assets (home, savings, retirement)? → You need more than minimum • Is your car worth more than $3,000-5,000? → Add collision/comprehensive • Do you have any income or future earning potential? → Increase liability limits • Could you afford to replace your car out-of-pocket? → If no, add collision/comprehensive

Final recommendation: Unless you're truly judgment-proof with a worthless car and zero income, invest in proper coverage. The difference in cost is minimal; the difference in protection is life-changing.

Frequently Asked Questions