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Most states require drivers to have car insurance. But you have many choices when it comes to the types of coverages you can get, insurance providers, and your deductible. This guide will help you determine what you need in an auto insurance policy, and how to get it.
Here’s what you need to know about car insurance:
Do I need auto insurance?
If your state requires auto insurance and you own a vehicle, then you must carry auto insurance to drive legally. The minimum coverage, however, isn’t enough for many drivers.
The state minimums for bodily injury and property damage liability insurance are the amount of coverage required to pay for any injuries or damages you cause in an accident. Some states also require uninsured motorist bodily injury, uninsured motorist property damage, and personal injury protection insurance in addition to these minimums.
But even in states with these additional insurance requirements, you may find yourself in a tough financial situation if you’re liable for an accident, since the minimum liability coverage required by your state may be far less than the cost of an accident.
Good to know: In 2020, the average cost of property damage per vehicle in a car crash with no injuries was $4,700, according to the National Safety Council. An accident that causes injury costs an average of $29,200 to $101,000, depending on the severity of the injury. And an accident that results in someone’s death costs an average of $1.75 million.
Setting higher liability limits may cost you more in monthly premiums, but it can ensure that you’ll be financially protected in an accident. If you cause a major accident and carry no more than your state’s required minimum coverage, you could be on the hook for any costs above and beyond those limits.
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Minimum car insurance requirements by state
| State | Bodily injury per person/accident | Property damage per accident |
|---|---|---|
| Alabama | $25,000 / $50,000 | $25,000 |
| Alaska | $50,000 / $100,000 | $25,000 |
| Arizona | $25,000 / $50,000 | $15,000 |
| Arkansas | $25,000 / $50,000 | $25,000 |
| California | $15,000 / $30,000 | $5,000 |
| Colorado | $25,000 / $50,000 | $15,000 |
| Connecticut | $25,000 / $50,000 | $25,000 |
| Delaware | $25,000 / $50,000 | $10,000 |
| Florida | None | $10,000 |
| Georgia | $25,000 / $50,000 | $25,000 |
| Hawaii | $20,000 / $40,000 | $10,000 |
| Idaho | $25,000 / $50,000 | $15,000 |
| Illinois | $25,000 / $50,000 | $20,000 |
| Indiana | $25,000 / $50,000 | $25,000 |
| Iowa | $20,000 / $40,000 | $15,000 |
| Kansas | $25,000 / $50,000 | $25,000 |
| Kentucky | $25,000 / $50,000 | $25,000 |
| Louisiana | $15,000 / $30,000 | $25,000 |
| Maine | $50,000 / $100,000 | $25,000 |
| Maryland | $30,000 / $60,000 | $15,000 |
| Massachusetts | $20,000 / $40,000 | $5,000 |
| Michigan | $50,000 / $100,000 | $10,000 |
| Minnesota | $30,000 / $60,000 | $10,000 |
| Mississippi | $25,000 / $50,000 | $25,000 |
| Missouri | $25,000 / $50,000 | $10,000 |
| Montana | $25,000 / $50,000 | $20,000 |
| Nebraska | $25,000 / $50,000 | $25,000 |
| Nevada | $25,000 / $50,000 | $20,000 |
| New Hampshire1 | $25,000 / $50,000 | $25,000 |
| New Jersey | $15,000 / $30,000 | $5,000 |
| New Mexico | $25,000 / $50,000 | $10,000 |
| New York | $25,000 / $50,000 | $10,000 |
| North Carolina | $30,000 / $60,000 | $25,000 |
| North Dakota | $25,000 / $50,000 | $25,000 |
| Ohio | $25,000 / $50,000 | $25,000 |
| Oklahoma | $25,000 / $50,000 | $25,000 |
| Oregon | $25,000 / $50,000 | $20,000 |
| Pennsylvania | $15,000 / $30,000 | $5,000 |
| Rhode Island | $25,000 / $50,000 | $25,000 |
| South Carolina | $25,000 / $50,000 | $25,000 |
| South Dakota | $25,000 / $50,000 | $25,000 |
| Tennessee | $25,000 / $50,000 | $15,000 |
| Texas | $30,000 / $60,000 | $25,000 |
| Utah | $25,000 / $65,000 | $15,000 |
| Vermont | $25,000 / $50,000 | $10,000 |
| Virginia | $25,000 / $50,000 | $20,000 |
| Washington | $25,000 / $50,000 | $10,000 |
| Washington, D.C. | $25,000 / $50,000 | $10,000 |
| West Virginia | $25,000 / $50,000 | $25,000 |
| Wisconsin | $25,000 / $50,000 | $10,000 |
| Wyoming | $25,000 / $50,000 | $20,000 |
| 1New Hampshire does not require its drivers to carry auto insurance, however, drivers must be able to cover the cost of property damage or bodily injury as a result of an accident in which they are at fault. | ||
What does car insurance cover?
Auto insurance policies are very specific about what is and isn’t covered. Before choosing a policy, it’s important that you read about the coverage, limits, and any exclusions.
Once you’ve decided on the type of coverage you want, shop around for quotes. You can do this easily by using a car insurance broker, like Credible Insurance.
Here are some of the most common types of coverage you’ll find on car insurance policies:
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Liability coverage
If you get into an accident while you’re behind the wheel and you’re at fault, then liability coverage will pay for any property damage or bodily injury that you cause to other drivers and their passengers, up to your policy limit.
Example: Let’s say you get into an accident with two other cars, causing $8,500 worth of damage to each of the other cars for a total of $17,000 in property damage. You carry the state minimum liability coverage of $10,000 — which means you’ll be responsible for paying $7,000 out of your own pocket.
Comprehensive coverage
If something other than a collision damages your vehicle, comprehensive coverage will pay for the repairs. Comprehensive coverage typically covers natural disasters like fires, vandalism, and falling objects.
Comprehensive coverage may even pay in the event of flood damage to your car. This is an important level of coverage, since modern cars are often considered a total loss if they become flooded.
Example: If a tree branch falls on your car during a storm, comprehensive coverage will pay to repair the damage, minus your deductible.
Collision coverage
Collision insurance covers the cost to repair or replace your own car if you hit another vehicle or object. Most states require you to carry liability insurance, but collision insurance isn’t required by law. If your car is under a loan, however, it’s common for lenders to require both comprehensive and collision insurance.
Example: If you strike a phone pole or guardrail, collision coverage may pay for repairs.
Learn More: Full Coverage Car Insurance: What Does It Mean?
Medical payments or personal injury protection (PIP)
Medical coverage on an auto insurance policy covers the medical costs for you and anyone else in your vehicle at the time of a collision.
Personal injury protection (PIP), also known as no-fault insurance, is similar to medical coverage in that it pays for the medical costs for you and any passengers who were in your car during the accident, no matter who’s at fault.
Twelve states (and Puerto Rico) require PIP coverage, although it may be beneficial to any driver who doesn’t have robust health insurance coverage. The 12 states that require PIP insurance include:
- Florida
- Hawaii
- Kansas
- Kentucky
- Massachusetts
- Michigan
- Minnesota
- New Jersey
- New York
- North Dakota
- Pennsylvania
- Utah
Example: Ambulance rides, hospital bills, and injury rehabilitation typically fall under this coverage.
Uninsured motorist bodily injury and property damage
While we would hope every driver is an upstanding member of society who carries at least the minimum required auto insurance, in reality, many people head to the nation’s roadways every day without coverage. As a result, nearly half of all U.S. states require some form of uninsured motorist coverage.
Example: If you’re injured or your car suffers damage caused by a driver not carrying insurance, uninsured motorist coverage offers you financial protection.
Check Out: What Is a No-Fault Accident?
Gap coverage
Gap coverage is an optional add-on to your auto insurance policy that pays for the difference to replace your totaled or stolen vehicle, often up to the original purchase price.
Example: If your car is totaled or stolen, most insurance policies will only pay for the car up to its depreciated value. Say your car’s depreciated value is $10,000, but you still owe $15,000 on your auto loan — you would have to make up the $5,000 difference out of pocket. Gap coverage pays for this difference.
Other types of insurance
Auto insurance policies typically offer more specialized features and benefits to help customers through additional challenges. Some common types of insurance you may be able to add to your auto insurance policy include:
- Rental reimbursement (loss of use): If you need to drive a rental car while your car is being repaired after an accident, this kind of coverage will reimburse you for the cost of the rental car, up to your policy limits.
- Rideshare insurance: While rideshare app companies provide some insurance to drivers when they have passengers in their car, this insurance doesn’t apply when drivers aren’t working for them. The coverage these companies offer also may not be enough to cover all your costs in an accident. Rideshare insurance can give you extra protection.
- OEM insurance: Original Equipment Manufacturer (OEM) coverage will ensure that any repairs made to your car will use parts from the original manufacturer, rather than third-party aftermarket parts.
- Classic car insurance: Collectors of classic, vintage, or antique vehicles need different coverage than the average driver Generally, a classic car insurance policy will cover the agreed value, which is what you and your insurer agree the vehicle is worth based on factors like its condition and current market value.
Check Out: Rental Car Liability Insurance: Do You Really Need It?
What is a deductible?
Deductibles are a common feature of insurance policies. A deductible is how much you have to pay out of pocket before your insurance benefits start. You can typically choose between several deductible options, with a lower deductible requiring a higher monthly payment.
For example: If you choose a $500 deductible and get into an accident that requires $2,000 in repairs, you would pay the first $500 and your insurance would pay the remaining $1,500.
If you have an accident with just $400 in damage, you would have to pay the entire cost, as it’s lower than the $500 deductible.
While it may be tempting to choose a higher deductible to save on premiums, it’s important to budget for the potential cost of paying up to your deductible if you do wind up in a fender bender.
How is car insurance priced?
Car insurance costs are somewhat complex, but it’s easy to break down the various factors that determine your rates.
Here are some of the major factors that go into insuring a car and its driver:
- Driver age: Younger drivers typically pay more than older drivers. Teens typically pay higher rates while middle-age drivers get lower rates.
- Driving history: If you have either a history of accidents or tickets, you can expect to pay more for insurance. Drivers with more experience and a good record typically get the lowest rates.
- Driver credit score: Your credit score plays a role in auto insurance rates. Drivers with higher credit scores generally get lower rates.
- Driver gender: Men and women pay different rates for driving, particularly younger drivers. Male teen drivers will usually pay more than females.
- Car location: Your home and work locations can influence auto insurance rates. If you tend to park in areas with more claims, insurers may charge higher rates.
- Insurance history: Your insurance history plays a major role in your rates. If you have a continuous insurance history with few or zero claims, you may qualify for better rates.
- How much you drive: The number of miles you put on your car in a typical month can drive your rates up or down. Some insurers offer per-mile insurance where you pay less for driving less.
- Marital status: Married drivers tend to be less-risky drivers than singles. While the rate difference is minimal, married drivers tend to pay a little less.
- Coverage choices: When you choose your deductible and coverage levels, your insurance premiums will go up or down with your selections.
- Vehicle: The quality, cost, type, and age of the car you drive plays a role in your rates. Someone with a fancy new red sports car will probably pay a lot more than a similar driver with a boring 10-year-old sedan.
- Discounts: Every insurance carrier has its own rules around discounts. There are common discounts for multiple policies at the same insurer, a good driving history, a low claim history, adding vehicle safety and anti-theft features, automatic payments, good students, and others.
- Insurer: Last but certainly not least is the insurance provider you choose. Every insurer has its own proprietary rates and formulas for deciding what customers pay. Shopping around can help you save a small fortune in some cases.
What should I do if I can’t afford car insurance?
While it may be tempting to simply drive without insurance if you can’t afford the premium, that’s the worst thing you can do. Not only is driving without at least the state-mandated insurance against the law, but it’ll also mean you’re personally liable if you cause an accident.
The good news is you have options if standard insurance premiums are too expensive. Some states, like California, offer programs to help low-income drivers get affordable liability insurance. You may also be able to get a lower rate from specialty insurance carriers. It pays to shop around until you find an insurer who will provide you with coverage at a price you can afford.
Tip: Look for potential discounts, savings, or lower coverage levels as well. In the worst case, it may be best to take public transportation while improving your finances so you can afford auto insurance in the future.
Learn More: How Long Do Car Accidents Stay on Your Record?
Why can’t my car be insured?
In some cases, you may be turned down for car insurance. Again, your best option here is to shop around for an insurer that would take you and your vehicle. However, some vehicles are going to be more difficult to insure, no matter how stellar your driving record may be.
Here are some of the common reasons why insurance providers refuse to insure specific cars:
- Imported cars that aren’t sold in the U.S.: Even if you legally import a car to the U.S. that’s not sold here, you may struggle to find an insurer who will give you a policy on your imported car. That’s in part because U.S.-based insurers are concerned about whether these imported cars meet American safety or emissions standards, and if you’ll be able to find necessary parts if the car needs repair.
- Modified cars: Making major alterations to your car, from changing the suspension, to adding a vehicle snorkel so you can drive across rivers, to turbocharging the engine, will make it much more difficult to find an insurer for your vehicle.
- Custom cars: If your car is unique or custom-built, insurers may shy away from providing you with a policy.
- High-performance and valuable vehicles: Generally, the more exotic, rare, expensive, or high-performing the car, the harder it’ll be to find an insurer. That’s because a loss of one of these cars will cost the insurance carrier much more than what it would cost to fix a standard sedan.
- Cars with salvage titles: Cars that have been totaled may be sold with a salvage title. The salvage title makes it clear that the car isn’t roadworthy. It’s possible to completely repair a salvage title car, but insurance carriers are unlikely to insure one.
How to get car insurance
You’ll generally need to follow these steps to get car insurance.
Shop around
When you’re in the market for car insurance, comparing rates from a number of different insurance carriers can help you figure out how much coverage you can afford.
You may want to just get the minimum coverage mandated by your state, or you may be interested in more coverage for peace of mind. Shopping around to get quotes from multiple insurers can help you find the right coverage at the right price for you.
Compare car insurance from top carriers
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Apply
Once you’ve decided which insurance carrier has the best coverage and price point for your needs, it’s time to apply for coverage. You’ll typically need to provide the following information to the insurance carrier:
- Your name and date of birth
- The name of the car’s registered owner (if different from the driver)
- Your driver’s license number and state of issue
- Your Social Security number
- The vehicle identification number (VIN)
- The vehicle’s current mileage
- Your address (or the address where the vehicle is registered)
- Name of your prior insurance carrier (if you were previously insured elsewhere) and the expiration date for the previous policy
- The date you bought the vehicle
- Your planned usage of the vehicle (for work or leisure purposes, and estimated mileage per month)
The insurer may also request additional information.
Choose your deductible
Once you’ve provided the necessary information, you can generally decide on your deductible amount, which will affect how much you pay for your premium.
You may also be able to decide whether to make monthly, quarterly, semiannual, or annual premium payments.
Once the insurer approves you and you’ve set up your payment schedule, you’ll receive proof of insurance. This is often a card sent in the mail, though many carriers offer a digital version if they have a mobile app.
Congratulations! You’re now an insured driver.
Eric Rosenberg contributed to the reporting for this article.
Copyright (c) 2023, Credible Insurance, Inc. d/b/a Credible Insurance Agency (CA Lic. # 0M90597). Insurance Services provided through Credible Insurance, Inc., VA: Credible Insurance Agency, Inc., MN SOS: Credible Cover, Inc. Credible Insurance is a subsidiary of Credible Labs Inc. 1700 Market St. Ste. 1005, Philadelphia, PA 19103.
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