Start with your state's minimum, then add based on what you own

Every state requires a minimum amount of liability insurance — the coverage that pays for damage or injury you cause to someone else. That minimum varies by state: some require as little as $15,000 per person injured, others require $25,000 or more. You can find your state's exact requirement on your state's Department of Insurance website or by calling your insurer.

But the state minimum is almost always too low for actual protection. If you cause a serious accident and your liability limit is $15,000, you are personally responsible for anything above that. A single injury claim can easily exceed $100,000. Reddit threads about insurance are full of people who learned this the hard way — or who watched someone else get sued for years over a single accident.

The real question is not "what does the law require" but "what would bankrupt me if I had to pay it." That answer depends on what you own, what you owe on your car, and whether you have savings or a house that could be seized in a lawsuit.

Key Takeaways

  • Your state sets a legal minimum for liability coverage, but that minimum usually leaves you personally responsible for serious accident costs.
  • If you have a car loan or lease, your lender requires collision and comprehensive coverage — you do not have a choice on those.
  • If you own your car outright and it is worth less than $5,000, dropping collision and comprehensive saves money with manageable risk.
  • Liability limits of $100,000 per person and $300,000 per accident are a practical middle ground that costs little more than state minimums.
  • Uninsured motorist coverage protects you if someone without insurance hits you, and costs almost nothing to add.

Liability coverage: why the state minimum is a trap

Liability insurance pays for medical bills, lost wages, pain and suffering, and property damage when you cause an accident. Your state's minimum is the floor, not the recommendation. In most states, that floor is $25,000 per person and $50,000 per accident — meaning if you injure two people, your coverage stops after the first person's bills hit $25,000.

A single serious injury — broken bones, surgery, months of physical therapy — routinely costs $50,000 to $150,000. A catastrophic injury can cost $500,000 or more. If your liability limit is $25,000 and the actual cost is $100,000, the injured person's lawyer will come after your personal assets: your house, your savings, your future wages. This can happen years after the accident.

Most insurance agents recommend $100,000 per person and $300,000 per accident as a practical baseline. The cost difference between state minimum and these limits is usually $10 to $30 per month. On Reddit, people often ask "is this worth it?" The answer is yes — the cost is small enough that the protection it buys is almost always worth keeping.

Collision and comprehensive: required if you owe money on the car

Collision coverage pays to repair or replace your car if you hit something or someone hits you. Comprehensive coverage pays for theft, weather, vandalism, and other non-collision damage. If you have a car loan or lease, your lender requires both — you cannot drop them without the lender's permission, and they will not give it.

If you own your car outright, these coverages are optional. The decision comes down to the car's value and your ability to replace it. If your car is worth $3,000 and you have $10,000 in savings, paying $100 per month for collision and comprehensive means you are spending $1,200 per year to protect $3,000 of value. That is a losing bet over time, though it does protect you from a sudden loss you cannot absorb.

Most people keep collision and comprehensive while the car is worth more than $5,000 to $7,000, then drop them as the car ages. The exact threshold depends on your emergency fund and your risk tolerance. If you cannot afford to replace the car, keep the coverage. If you can, dropping it saves real money.

Deductibles: the trade-off between monthly cost and out-of-pocket risk

A deductible is what you pay out of pocket when you file a claim. Common deductibles are $250, $500, $1,000, and $2,500. A higher deductible lowers your monthly premium; a lower deductible raises it.

The math is straightforward: if raising your deductible from $500 to $1,000 saves you $15 per month, you break even after 33 months of claims-free driving. Most people go claims-free for years, so the higher deductible usually wins financially. But if you are a nervous driver or live somewhere with frequent accidents, a lower deductible might be worth the extra cost for peace of mind.

A common strategy is to use a high deductible ($1,000) on collision and comprehensive — since you are less likely to file these claims — and a low deductible ($250 or $500) on liability, where you might be forced to file by the other party's lawyer. Your insurer can set different deductibles for different coverages.

Uninsured and underinsured motorist coverage: cheap protection against other people's mistakes

Uninsured motorist coverage pays your medical bills and car damage if someone without insurance hits you. Underinsured motorist coverage covers the gap if the other driver's liability limit is too low to pay your full claim. Many states require you to carry these; others make them optional.

Both coverages are inexpensive — often $5 to $15 per month combined — and they protect you against something outside your control: someone else's decision not to carry insurance. On Reddit, people often ask whether to skip these to save money. The answer is almost always no. The cost is too small and the protection too real.

Your uninsured motorist limit should match your liability limit. If you carry $100,000 in liability, carry $100,000 in uninsured motorist coverage. This keeps your protection consistent across different scenarios.

Medical payments coverage: optional but useful if you have no health insurance

Medical payments coverage (sometimes called MedPay) pays your medical bills after an accident, regardless of who was at fault. It covers you and your passengers. The limit is usually $1,000 to $5,000 per person.

If you have health insurance, this coverage is less critical — your health insurance will cover your medical bills, and you can pursue the at-fault driver's liability insurance for reimbursement. But if you are uninsured or have a high deductible, MedPay can save you thousands in out-of-pocket costs. It costs $10 to $25 per month for a $5,000 limit.

How to think about coverage if you are buying your first car

If you are financing a new or used car, your lender will require collision, comprehensive, and liability. You will not have much choice. The lender typically specifies minimum liability limits (often $100,000 per person) and a maximum deductible (often $1,000). Start with what the lender requires, then add uninsured motorist coverage to match your liability limit.

Once the car is paid off, you can reassess. If the car is still worth $10,000 or more, keep collision and comprehensive. If it has dropped to $3,000 and you have an emergency fund, you can drop collision and keep comprehensive (theft and weather are less predictable than your own driving). Keep liability and uninsured motorist at $100,000 per person indefinitely — the cost is low and the protection is real.

Frequently Asked Questions

What if I cannot afford the insurance I need?

Start by raising your deductible to $1,000 or $1,500 — this cuts your premium significantly. Drop collision if your car is worth less than $5,000 and you have some savings. Keep liability and uninsured motorist at whatever level you can afford; $50,000 per person is better than state minimum, and $100,000 is better still. Some states offer low-income insurance programs through their Department of Insurance.

Do I need roadside assistance or rental car coverage?

Roadside assistance covers towing and lockouts; rental car coverage pays for a loaner while yours is being repaired. Both are optional and relatively cheap ($5 to $15 per month). Roadside assistance is worth adding if you drive an older car or live far from a repair shop. Rental car coverage is useful if you cannot afford to be without a car during repairs.

Will my premium go down if I bundle home and car insurance?

Most insurers offer a discount (usually 10 to 25 percent) if you bundle policies. This can save hundreds per year, but only if the bundled rate is actually cheaper than shopping separately. Get quotes from at least two insurers for both policies before deciding.

What happens if I get in an accident with less coverage than I need?

Your insurance pays up to your limit, and you are personally responsible for anything above that. The other party's lawyer can sue you for the difference, garnish your wages, or place a lien on your house. This is why liability limits matter more than any other coverage decision.

Can I change my coverage mid-year?

Yes. You can raise or lower coverage, change deductibles, or add and remove optional coverages at any time. Changes usually take effect immediately or within a few days. If you are dropping collision because your car is paid off, make the change on the day the loan is satisfied.