Car Insurance Requirements

Car insurance requirements are a fact of life for most drivers in the U.S. However, necessary coverage and limits vary by state. In addition, since each state mandates coverage requirements, drivers may need to change their insurance policy if they move.

Most state minimum car insurance requirements include bodily injury liability and property damage liability insurance, and some states require additional coverages, such as MedPay or PIP. Drivers who fail to carry the mandatory coverages face penalties, such as fines and a driver’s license suspension.

Keep reading to learn more about car insurance laws by state, which states don’t require car insurance, and what coverage you need.

Read more: How Much Car Insurance You Need: An Expert Guide

Minimum Car Insurance Requirements by State

Most states require a minimum amount of car insurance. However, coverage and limits vary widely. For example, Florida only requires property damage liability and personal injury protection (PIP). On the other hand, New Jersey requires bodily injury liability, property damage liability, PIP, and uninsured/underinsured motorist coverage.

When looking at the required minimum liability insurance by state, you’ll see numbers like 25/50/25. This number indicates the coverage amount you need. In this example, you would need $25,000 in bodily injury per person, $50,000 in bodily injury per accident, and $25,000 in property damage liability per accident.

While insurance companies know the limits required in your state, it’s a good idea to be aware of coverage requirements. Then, you can make an informed decision about the necessary coverages and limits.

This table shows the state’s minimum liability insurance and any other mandatory coverages.

Minimum Liability Car Insurance Limits Required by State

Read more:

• Arkansas Car Insurance Laws
• North Carolina Car Insurance Laws

Remember, these are just the minimum coverage requirements. Typically, coverage and limits are very low and may not provide the protection you need. Instead, consider adding coverages and increasing limits.

For example, California only requires $15,000 in bodily injury liability. That limit is low and quickly exhausted in a serious car accident, especially if a hospital stay is necessary. Increase the limit to a level you’re comfortable with to gain the most protection.

Keep in mind that while minimum coverage meets state car insurance requirements, it doesn’t provide coverage for your vehicle. On the other hand, full coverage car insurance includes mandatory coverage, collision, and comprehensive insurance. So, consider full coverage to have protection for your car.

Another critical factor to consider is loan and lease requirements. If you’re financing your car or have a lease, the minimum coverage requirements probably won’t meet your lender’s requirements. Typically, lenders want full coverage insurance and gap insurance coverage. Carefully read your loan or lease paperwork to be fully aware of the coverage you need.

Required Car Insurance Coverage

As we’ve discussed, mandatory car insurance coverage varies by state. However, six types of coverage can be required. These coverages are in place to show financial responsibility if you cause an accident.

Mandatory coverage typically includes:

• Bodily injury liability (BIL): BIL helps pay for injuries to others if you cause an accident. Typically, BIL limits are very low and won’t cover medical costs in a severe accident. Find the best bodily injury liability car insurance companies here.
• Property damage liability (PDL): PDL covers property damage you may cause in an accident, such as hitting another vehicle or object like a fence. Again, limits are generally low and won’t cover all damages.
• Uninsured motorist coverage (UM): UM helps pay your costs if a driver hits you without car insurance. While most states include property damage in UM coverage, some only include bodily injuries. Learn about the best uninsured motorist coverage car insurance companies here.
• Underinsured motorist (UIM). Like UM, UIM coverage helps pay for damages caused by a driver with little insurance. So, if the at-fault driver only has minimum coverage, your UIM coverage helps cover your costs.
• Medical payments (MedPay) car insurance. MedPay helps cover medical costs for you and your passengers, such as doctor visits and X-rays. Maine and New Hampshire are the only states that require MedPay. Find the best medical payments car insurance companies here.
• Personal injury protection (PIP). PIP is similar to MedPay but includes other related costs, such as child care and funeral expenses. More than a dozen states require PIP. Learn about the best personal injury protection car insurance companies here.

Read more: Florida Car Insurance Laws

Remember, each state is different. For example, while one state may only require BIL and PDL, another may also require UM/UIM and MedPay. In addition, states with the highest auto insurance coverage requirements tend to have the highest insurance rates.

States That Don’t Require Car Insurance

While almost all states require car insurance, there are some exceptions. In addition, several states that require coverage give drivers other options to show financial responsibility. So, what states don’t require car insurance?

New Hampshire is the only state that doesn’t require drivers to carry car insurance. Instead, drivers only need to be able to pay for damages following an at-fault accident. There are no specific requirements, just that drivers can cover damages.

However, New Hampshire can still force drivers to get car insurance after significant infractions, such as a DUI. In addition, drivers who buy New Hampshire car insurance must carry at least 25/50/25 in liability coverage. (For more information, read our “Best New Hampshire Car Insurance“).

Read more: How to Get Car Insurance: An Expert Guide

Virginia requires car insurance, but it gives drivers another option. Virginia drivers can pay an uninsured motorist fee of around $500 each year. However, minimum coverage costs about the same amount and provides much more protection since it helps pay for injuries and damages you may cause.

A few other states also offer drivers more options than minimum car insurance. These states typically allow drivers to provide proof of a deposit or bond for a certain amount of money which can be used to pay for damages and injuries if you cause an accident.

If you choose not to carry car insurance, you’re left without many protections and must navigate claims independently. For example, if you’re at fault in an accident and have car insurance, your insurer handles claims and negotiates with the other driver and the insurance company. However, you’ll have to handle this yourself if you don’t have insurance.

Other Car Insurance Coverage Drivers May Need

In addition to your state’s required coverage, you may need other coverages, depending on your financial situation and lender requirements. Let’s look at the coverages you may also need to carry.

First, collision coverage pays for your vehicle damage if you cause an accident. Coverage includes damages from hitting another vehicle, an object like a fence or tree, and single-car rollover accidents. Find the best collision car insurance companies here.

Next, comprehensive car insurance pays for your vehicle damage unrelated to an accident. Damages include theft, vandalism, fire, falling debris like tree limbs, and acts of nature such as floods, hail, tornados, and hurricanes.

Finally, many lenders require gap insurance coverage. Gap pays the difference between what you owe on your car and what it’s worth if it’s totaled. Fortunately, drivers can drop gap coverage once they owe less than the vehicle’s worth.

Lenders typically require all of these coverages to protect their investments. For example, if your car gets totaled and you don’t have the necessary coverage, you’ll have to pay for repairs out of pocket or the remainder of your loan.

Drivers may also consider optional coverages, such as new car replacement, rental car reimbursement, and roadside assistance, to get the most protection available.

Minimum vs. Full Coverage Car Insurance

The best car insurance coverage depends on your needs. While minimum coverage is the cheapest option and meets your state requirements, it offers no protection for you, your passengers, and your vehicle. Additionally, minimum coverage limits are very low and may not cover injuries and damages, leaving you with high out-of-pocket costs.

On the other hand, full coverage car insurance is more expensive, but it pays for damage to your vehicle from accidents, acts of nature, theft, and other incidents. In addition, most lenders require full coverage for loans and leases.

If you can’t carry full coverage car insurance, consider increasing your liability coverage limits to help pay for costly injuries and damages. Otherwise, you may be sued to help cover expenses beyond your insurance limits.

Car Insurance Requirements: The Bottom Line

Car insurance requirements vary significantly by state, and most states require a minimum amount of liability coverage. Additionally, several states require more coverage, such as UM/UIM, MedPay, and PIP.

However, the required coverage is typically insufficient to meet the driver’s needs. For example, minimum coverage comes with low limits and doesn’t protect your vehicle. Experts recommend increasing limits and adding full coverage, which includes collision and comprehensive coverage. In addition, most lenders require full coverage and gap insurance.

While New Hampshire is the only state that doesn’t require car insurance, other states offer drivers various options instead of traditional car insurance. For example, Virginia allows drivers to pay an uninsured motorist fee, and other states allow drivers to create a cash deposit to cover damages.

However, carrying car insurance is a better option for most drivers. Minimum coverage rates are typically low, and insurance offers drivers more protection. In addition, drivers without insurance must pay for damages out of pocket and negotiate claims independently.

Drivers can get affordable minimum or full coverage by shopping around. Compare multiple companies to find insurance that meets your state’s car insurance coverage requirements with the lowest rates.