How Much Car Insurance Do You Need?

Most drivers need more than the minimum amount of car insurance required by their state. While minimum coverage may keep you legal, it often doesn’t provide enough financial protection after a serious accident. 

Many insurance professionals recommend carrying at least 100/300/100 liability coverage, especially for drivers with savings, a home, or other assets to protect.¹

Every state except New Hampshire requires drivers to carry some form of car insurance or financial responsibility coverage. Minimum coverage laws vary significantly from one state to another.²

Many insurance professionals consider 100/300/100 coverage a strong baseline recommendation. This means:

• $100,000 bodily injury liability per person

• $300,000 bodily injury liability per accident

• $100,000 property damage liability per accident

However, some drivers may need higher limits depending on their income, assets, and driving habits.

New Hampshire drivers must still prove financial responsibility after certain accidents.

Your state minimum is the floor, not the target. Luva lets you compare quotes at different liability limits, so you can see what coverage level is best for your unique situation.

Understanding the major types of car insurance coverage can help you decide how much protection you actually need.

Liability coverage

Liability insurance pays for injuries or property damage you cause to others in an accident. This is the core coverage required in almost every state.

Higher liability limits are generally recommended for drivers with savings, investments, or property that could be targeted in a lawsuit.

Collision coverage

Collision coverage pays to repair or replace your car after an accident, regardless of fault.

This coverage is usually recommended for newer vehicles, financed vehicles, or cars that would be expensive to repair or replace out of pocket.

Comprehensive coverage

Comprehensive insurance covers non-collision losses such as theft, hail, vandalism, fire, flooding, or hitting an animal.

Drivers with newer vehicles or vehicles parked outdoors often benefit from carrying comprehensive coverage.

Uninsured/Underinsured motorist coverage

According to the Insurance Research Council, about one in seven U.S. drivers is uninsured.³ Uninsured motorist coverage helps pay for injuries or damages caused by drivers who have little or no insurance.

This coverage is especially important because many drivers on the road carry only minimum coverage or no insurance at all.

Personal Injury Protection (PIP)

PIP coverage helps pay medical expenses, lost wages, and certain other costs after an accident.

PIP is required in many no-fault insurance states, including Florida, Michigan, and New York.

The right amount of car insurance depends on several personal and financial factors. Comparing coverage options side by side through Luva can help you evaluate different liability limits and optional coverages before choosing a policy. 

Here’s a look at what you should consider.

Your state’s minimum requirements

Your state minimum determines the least amount of insurance you can legally carry. However, minimum coverage may not fully protect you after a major accident.

Your assets and savings

Drivers with higher incomes, retirement accounts, or home equity often benefit from carrying higher liability limits. Without enough liability coverage, your personal assets could be at risk after a lawsuit.

Your vehicle’s value

Older vehicles with low market value may not need collision or comprehensive coverage. Newer vehicles often justify carrying both. If you lease or finance a car, your lender will usually require collision and comprehensive coverage.

Your driving habits

Drivers who commute daily, drive long distances, or spend significant time in heavy traffic may want higher coverage limits.

Your risk tolerance

Some drivers are comfortable accepting more financial risk in exchange for lower premiums. Others prefer broader protection and greater peace of mind.

Your deductible is the amount you pay out of pocket before your insurance company covers the rest of a claim.

Choosing a higher deductible usually lowers your monthly premium. Choosing a lower deductible generally increases your premium but reduces your out-of-pocket costs after a claim.

Many drivers choose deductibles between $500 and $1,000 for collision and comprehensive coverage. When choosing a deductible, ask yourself whether you could comfortably pay that amount tomorrow after an accident or storm damage claim.⁴

Several optional coverages can provide additional protection depending on your situation.

• GAP insurance: GAP insurance pays the difference between your vehicle’s actual cash value and your loan balance if your car is totaled. This coverage is commonly recommended for new vehicles with long loan terms or small down payments.

• Roadside assistance: Roadside assistance helps with towing, flat tires, dead batteries, and lockouts. Drivers who travel frequently or own older vehicles may find this coverage useful.

• Accident forgiveness: Accident forgiveness may prevent your rates from increasing after your first at-fault accident. Availability varies by insurer and state.

• Rental car reimbursement: Rental reimbursement coverage helps pay for a rental vehicle while your car is being repaired after a covered claim. This can be helpful for households with only one vehicle.

• Rideshare coverage: Personal auto insurance policies often exclude business driving for companies such as Uber or Lyft. Rideshare insurance helps fill those coverage gaps.

• Umbrella insurance: Umbrella insurance provides extra liability protection above your auto and homeowners insurance limits. Drivers with substantial assets often consider umbrella policies for additional financial protection.

• Custom parts coverage: Custom parts coverage helps protect aftermarket wheels, stereos, lifts, wraps, or performance upgrades. Standard policies may limit coverage for modified vehicles.