What is the minimum amount of liability insurance required

How much liability insurance do I need?

You need enough liability insurance to cover your net worth. Having coverage equal to the value of the assets you own and all the money you have, minus your debt, protects you financially in case of a serious car accident.

When to Carry Only the Minimum Liability Coverage

Although almost every state requires drivers to carry liability insurance, the minimum coverage is not always enough to cover the cost of an accident. It's always best to carry as much liability coverage as you can afford, especially if you have a high net worth. You can generally get away with a lower property damage liability limit if you want to save, however, since property damage liability claims are usually less expensive than bodily injury liability claims.

If you don't have many assets or think the risk is worth it, you might be comfortable with carrying only the minimum coverage. But no matter what, make sure you're carrying enough insurance to comply with state law and avoid paying fines for driving uninsured.

Liability Limits on Auto Insurance

Liability limits on auto insurance are the maximum amount that your insurance company will pay for injuries and property damage in accidents that you cause. Liability limits are typically written as three numbers divided by slashes.

For example, Arizona's liability coverage requirements are 50/30/10. That means drivers need to carry $50,000 in bodily injury liability coverage per person, $30,000 in bodily injury liability coverage per accident, and $10,000 in property damage liability coverage overall.

Why You Need More Liability Insurance Than the State Minimum

Your insurance company will never pay for anything beyond the limits of your policy. Using the Arizona example, if you cause an accident that leads to $70,000 in medical bills for the other driver, you will have to pay for $40,000 if you are only carrying the minimum insurance required. And if you can't afford to pay the full amount, the other driver can sue, and you can have your assets seized or wages garnished to cover the remainder.

What is a 100/300 policy?

A 100/300 policy is an insurance policy that includes bodily injury liability coverage limits of $100,000 per person and $300,000 per accident. A 100/300 policy is generally recommended for drivers who can afford it, since it offers more protection against serious accidents than the insurance required by most states.

It's important to note that the 100/300 insurance notation does not include property damage liability insurance, which is required in nearly every state in order to pay for property damage that you cause in an accident. Many states also require other types of insurance in addition to liability coverage, including personal injury protection (PIP) and uninsured/underinsured motorist coverage.

Although bodily injury liability insurance of 100/300 is recommended for most drivers, you should consider purchasing even higher limits or a personal umbrella policy if you have a particularly high net worth. Additionally, bodily injury liability insurance will only pay for other people's injuries if you cause an accident, not your own. In order to cover your own medical expenses after a wreck, you'll need to purchase PIP or medical payments coverage.

To learn more, check out WalletHub's guide to liability insurance.

Do I need 100/300 insurance?

No, you do not need 100/300 insurance unless you live in Florida and are required to file an FR-44. Although no other state laws require drivers to buy 100/300 insurance, a policy that pays up to $100,000 in bodily injury liability coverage per person and $300,000 per accident can still be a good investment.

Bodily injury liability insurance pays for injuries you cause to others in a car accident, and it's required in nearly every state. However, most states mandate limits ranging from 25/50 to 50/100, and a few states require even less.

Given that you can be held personally responsible for injury-related costs that exceed your bodily injury liability coverage, 100/300 insurance is usually recommended for the average driver. But it's also a general rule of thumb to buy at least enough liability coverage to equal your assets. So, if you have a particularly high net worth, you may want to buy more liability coverage than 100/300.

To learn more, check out WalletHub's complete guide to liability car insurance.

How much bodily injury liability should you have?

You should have at least as much bodily injury liability insurance coverage as your state requires, and it's good to purchase coverage limits that are equal to your assets. Maintaining enough bodily injury liability insurance to cover your net worth is recommended to prevent lawsuits.

Bodily injury liability coverage pays for other drivers' and passengers' injuries when the policyholder is at fault in an accident. Bodily injury liability can cover medical bills, funeral expenses, lost wages, legal fees, and other related costs.

How Much Bodily Injury Liability You Need

Drivers everywhere except New Hampshire, Virginia, and remote parts of Alaska are required to carry at least their state's minimum required amount of bodily injury liability coverage. And in every state, you are legally responsible for serious injuries resulting from car accidents that you cause.

In most states, if your bodily injury limits are not high enough to pay for all the medical bills from an accident, the not-at-fault driver and their passengers can sue you for any uncompensated expenses. Drivers with a high net worth are especially vulnerable targets for lawsuits if their bodily injury coverage does not pay for all of the other driver's expenses.

Consequently, you should have enough bodily injury liability coverage to equal your assets, rather than just carrying your state's minimum. After all, the National Association of Insurance Commissioners reports that the average bodily injury liability claim in 2016, the latest year with data, was $19,201 – more than some states require in coverage.

If you need more coverage than car insurance companies sell, you can always purchase an umbrella policy to keep your assets from being seized in the event of a lawsuit.

Bodily Injury Liability Requirements by State

Bodily Injury Liability Limits Example

The limits for bodily injury liability will usually be displayed as 15/30 or $15,000/$30,000, which is the minimum required for California. These numbers mean that, for any given accident, a driver's bodily injury liability insurance will cover:

• $15,000 for injuries sustained by any one person
• $30,000 for injuries sustained by all people involved in the accident

How much property damage liability do I need?

You need at least the minimum amount of property damage liability coverage required in your state, for starters. But because many states have low minimum insurance requirements, it's advisable to get as much coverage as you can afford, and to purchase limits that are equal to your net worth at the very least. Property damage liability pays for damage to other people's property after you are at-fault in an accident, so you will be financially responsible for any expenses beyond your policy limits.

The average property damage liability claim is around $4,000, but it's best to consider a worst-case scenario when deciding on your coverage limits. For example, a new car costs nearly $36,000 on average. So if you total someone else's new car but are only carrying $4,000 in property damage coverage, you will be personally responsible for $32,000. The not-at-fault party can sue you for this sum, and in some states your wages can even be garnished.

Because of the risk posed by expensive accidents, you should also consider your assets when choosing policy limits. For instance, if your net worth is $100,000, it's recommended that you purchase $100,000 in property damage liability coverage. Otherwise, the other driver might be able to take your assets in a lawsuit. And if your net worth is particularly high, you can supplement these limits with an umbrella policy.

On the other hand, if your net worth is low, you are less likely to be sued for damages. In this case, it might be worth choosing lower coverage limits in return for lower premiums. However, purchasing higher limits is not that much more expensive than buying the minimum coverage, and the benefits can be well worth it down the road.

How much medical payments coverage do I need?

You need $1,000 or $2,000 in medical payments (MedPay) coverage in the two states that require it: Maine and New Hampshire. If MedPay is optional in your state, the exact amount of MedPay that you need depends on a few factors, including what other types of insurance you have and how robust your emergency fund is. Even if you have overlapping coverage, like personal injury protection (PIP) or health insurance, MedPay is generally a good investment because it is inexpensive and complements other types of insurance.  

How Much MedPay You Need by State

• New Hampshire: $1,000+ for drivers who choose to purchase coverage
• Maine: $2,000+
• Other States: optional

Medical payments coverage pays for your medical expenses after an accident regardless of who was at fault, so it usually overlaps with PIP and standard health insurance. But MedPay can also cover deductibles, copayments, and coinsurance expenses that come with other types of coverage, so it can help you avoid additional costs if you're severely injured in an accident.

What to Consider Before Purchasing Medical Payments Coverage

When deciding how much MedPay you want to purchase, you should consider what types of coverage you already have and their associated costs. For example, if you have a high deductible health insurance policy, MedPay can help you reduce your out-of-pocket medical expenses after an accident. And if you live in a state that requires PIP, MedPay can be used as a backup in case your policy limits are exhausted by severe injuries.

In addition to existing coverage (and state laws for those in Maine and New Hampshire), you should consider your financial situation when deciding whether or not to purchase MedPay. If you have a lot saved up for a rainy day, for instance, then it's probably fine to skip the additional coverage. But considering that MedPay often costs less than $10 per month, the added peace of mind is usually worth the minor investment.   

To learn more, check out WalletHub's guide to medical payments coverage.

How much PIP insurance should I have?

You should have $2,500 to $30,000 in PIP coverage per person in states that require personal injury protection (PIP), though exact requirements vary by state. Even if it's not mandatory in your state, you should purchase as much PIP coverage as you can comfortably afford. For example, $10,000 in PIP coverage will ensure that you're covered for at least basic medical expenses and some lost wages.

Personal injury protection pays for your medical expenses after an accident, regardless of who was at fault. As a result, purchasing higher limits can better protect you against hefty expenses that may result from injuries.

What to Consider Before Purchasing PIP Coverage

When deciding how much PIP to purchase, you should consider how much coverage you can afford as well as the coverage offered by any health insurance that you have. If you have a reliable health insurance policy, you may be able to purchase lower PIP limits, since the coverage overlaps in some areas.

However, you should keep in mind that PIP also covers certain long-term expenses that don't typically fall under health insurance, like lost income and household services. Additionally, PIP can help cover the deductibles and copays that you're typically required to pay with health insurance, so you'll have fewer out-of-pocket costs.

To learn more, check out WalletHub's guide to personal injury protection.

How much car insurance do I need in California?

Anamarie Waite, Car Insurance Writer

Drivers in California need $15,000 of bodily injury liability insurance per person (up to $30,000 per accident) and $5,000 of property damage liability insurance. Collision, comprehensive and gap insurance may also be required by a lender or lessor if your vehicle is financed.

In addition, an optional but recommended type of coverage in California is uninsured/underinsured motorist insurance. It replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits.

Here's How Much Car Insurance Drivers Need in California:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under California law. Lenders or lessors usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. Lenders may also require gap insurance, which covers the difference between what you owe on your loan or lease and what the vehicle is worth if it has been stolen or totaled.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in California to make sure you're paying for the coverage you need.

How much car insurance do I need in Florida?

Anamarie Waite, Car Insurance Writer

Drivers in Florida need $10,000 of property damage liability insurance. Florida also requires personal injury protection (PIP) insurance. PIP covers medical expenses for you and your passengers after an accident.

Here's How Much Car Insurance Drivers Need in Florida:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Florida law. Lenders usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. Lenders may also require gap insurance, which covers the difference between what you owe on your loan or lease and what the vehicle was worth if it gets stolen or totaled.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Florida to make sure you're paying for the coverage you need.

How much car insurance do I need in Texas?

Anamarie Waite, Car Insurance Writer

Drivers in Texas need $30,000 of bodily injury liability insurance per person (up to $60,000 per accident) and $25,000 of property damage liability insurance. Collision, comprehensive and gap insurance may also be required by a lender or lessor if your vehicle is financed.

In addition, an optional but recommended type of coverage in Texas is uninsured/underinsured motorist insurance. It replaces the liability coverage an at-fault driver should've had and pays for your costs up to your policy limits.

Here's How Much Car Insurance Drivers Need in Texas:

If you lease or finance your car, you may be required to carry coverage types that are not mandatory under Texas law. Lenders or lessors usually require comprehensive and collision insurance. Collision insurance covers repairs to your car when you hit another car or object. If the damage to your vehicle was caused by something other than a collision—like a natural disaster, vandalism, falling objects, or animals—it is most likely covered by comprehensive insurance. Lenders may also require gap insurance, which covers the difference between what you owe on your loan or lease and what the vehicle is worth if it has been stolen or totaled.

Even if you're not required to carry these optional coverage types, you may still need them. You can learn more about when to drop optional coverage and the penalties for driving without insurance in Texas to make sure you're paying for the coverage you need.