Find the Cheapest Auto Insurance Quotes in Your Area
When buying car insurance, it is typically recommended that you buy liability coverage limits equivalent to your approximate net worth. Liability coverage on your car insurance policy pays for bodily injury and property damage you cause to other people in an accident.
How much is auto insurance coverage?
Scroll through the table below to find the typical cost of car insurance coverage in your state, or use the form to find a cheaper auto insurance quote:
|State||Average monthly car insurance rate||Average annual car insurance rate|
Find the Cheapest Auto Insurance Quotes in Your Area
We looked at data from states' Departments of Insurance and saw that annual premiums are on the rise in most U.S. states. The average cost of car insurance coverage for automobile owners has generally risen, with Arkansas, Georgia, North Carolina and Virginia being the exceptions. These quotes for car insurance coverage in select states will give you a good estimate for the annual average cost of car insurance.
How much liability insurance should I carry? Is the minimum liability coverage limit in a standard auto policy good enough?
The minimum auto insurance coverage limit required by law varies depending on the state you live in. It’s not necessarily the amount of liability coverage you should carry, however. The overall cost of an accident can exceed the liability coverage limits on a driver’s policy. When that happens, the driver’s personal assets are exposed and can be seized in a lawsuit to pay for the rest of the claim, especially if your net worth exceeds the damages claimed.
Patti Clement, first vice president of HUB International in New York, offered the following car insurance coverage advice: “Make sure that you purchase the appropriate liability coverage, not the minimum available. If there is an accident and you have split limits and do not have good coverage, you will be out of pocket, whatever the damages are, over and above those limits for bodily injury and property damage.”
How much liability coverage do I need on my car insurance policy?
“I urge prospective clients to buy as much liability coverage as they can reasonably afford, preferably in excess of your total assets and then some,” advised Kristofer Kirchen, president of First Florida Insurance Network of Central Florida. “The reason is that regardless of what your assets are, you have no control over who gets injured or the extent of that injury.”
Is there additional room in your budget to accommodate more car insurance coverage? It's impossible to foresee what accidents may happen and how much risk you'll be exposed to. It is, however, straightforward to cap that exposure at the total value of your approximate net worth, which serves as a benchmark for good car insurance coverage.
To determine what your recommended auto insurance liability coverage should be, tally the value of your house, automobiles, investments, retirement accounts, banking accounts and any other assets, minus your total debts and liabilities. If you would like to have an abundance of security and can afford it, you can opt for even higher coverage limits.
At the very least, motorists are required by law to carry the statutory liability protection or proof of financial responsibility (in certain states). “If pressed by someone who cannot afford more, I would say that they should get at least 25/50/25, but I reiterate that people should buy as much as they can afford,” recommended Kirchen.
If you're interested in knowing what the minimum car insurance coverage requirements are in your particular state, look no further. In the table below, you'll see three numbers listed under "Car Insurance Coverage Requirements." The first two numbers represent the bodily injury liability requirements and the third number references property damage coverage limits. For example, in Alabama $25,000/50,000/25,000 means that the insurance company will cover the cost of injuries to each person involved in an accident up to a limit of $25,000 each or total injuries up to $50,000 per accident. Additionally, the insurer will cover up to $25,000 per accident (the third number) for any property damage you cause.
|State||Car Insurance Coverage Requirements|
|District of Columbia||$25,000/50,000/10,000|
As Kirchen points out, it is better to pay a few hundred dollars each year for the benefit of recommended auto insurance coverage than to lose a few hundred thousand dollars for life. Now that you have a better idea of good liability car insurance coverage, start scoping out which auto insurance providers can offer it at the cheapest rates. For a list of cheap car insurers servicing your city, enter your zip code below.
Find the Cheapest Auto Insurance Quotes in Your Area
Example of insurance payouts for liability claims
To illustrate the concept of adequate or recommended liability auto insurance coverage, let’s use a hypothetical example of an accident in New Jersey. The minimum liability car insurance coverage limit in the Garden State is 15/30/5: $15,000 per person for bodily injury, $30,000 max payout for injury costs to others in the accident and $5,000 of payout for property damaged by the accident.
Let’s say you crash into another vehicle with a driver and passenger on board. The driver and passenger in the second car are seriously injured, and their car is heavily damaged. Both the driver and passenger will submit third party claims for:
- $25,000 in bodily injury for the driver
- $10,000 in bodily injury for the passenger
- $6,000 in property damage to the driver's vehicle
Your insurer will pay out the maximum coverage limit under your standard car insurance policy. In the case of your 15/30/5 coverage, your insurer will pay $15,000 in bodily injury liability for the driver, $10,000 in bodily injury for the passenger and $5,000 in property damage liability. The excess costs not covered by your auto insurance policy are:
- $10,000 for additional medical care for the driver, and
- $1,000 for the vehicle repair
The other party has recourse to go after the rest of your assets to pay for the leftover balance. “If you do not have the appropriate limits, the balance from your coverage is deducted, and you will have to pay that out of pocket — even garnishing your wages or income for the rest of your life,” cautioned Clement.
How do property damage and bodily injury liability work? What is the recommended coverage?
Property damage liability coverage will cover the repair and parts replacement costs of damage to homes, storefronts, vehicles and other stationary objects. The cost of repairing or getting original equipment manufacturer parts can be very different depending on whether it’s a $10,000 car or a $100,000 car.
Bodily injury liability coverage will pay out for medical care, emergency services, compensation of lost income and even funeral expenses. Claims made under bodily injury liability coverage are affected by a number of variable factors, which as Kirchen explained, can range widely:
The skill level of the injured third party
Is the other driver a minimum wage employee or a highly skilled neurosurgeon? Bodily injury liability compensates the other party for lost income.
The type of injury sustained by the other driver
Were there minor bruises and scratches, a debilitating head injury, a loss of limb or nerve damage? An accident can potentially impact someone’s livelihood and earning power. “There is a big difference between bumps and bruises and a head injury or loss of limb or nerve damage in a hand,” explained Kirchen, “all of which can severely hinder the aforementioned neurosurgeon’s practice.”
The age of the injured person
A young professional still has many years of significant earning power ahead that the accident could have impacted, while an older person may be getting ready to retire and therefore won't experience much loss of income.
Recommended bodily injury and property damage liability coverage
Because claims made to property damage and bodily liability coverage can vary dramatically depending on the drivers and vehicles involved in the accident, we typically recommend carrying an amount equal to your net worth. To determine your net worth, add your assets and subtract this number by your total debt. If your net worth is less than the minimum requirements of your state, you may consider getting the minimum standard liability coverage.
What’s an umbrella policy? Should I add it to my car insurance coverages?
A personal umbrella policy pays for damages above and beyond the maximum payouts on your auto insurance policy. An umbrella policy offers good car insurance coverage if you have a substantially high net worth. If you have a low net worth, an umbrella policy is probably not necessary, as it is unlikely a claim filer will sue you for damages that exceed your total asset base.
Excess liability protection is usually in the form of combined single coverage limits, which doesn’t set aside a set amount for bodily injury or property damage that the standard auto insurance policy does. Coverage starts at $1 million and can be augmented in increments of a million.
The best part about an umbrella policy is its return on incremental premium. Adding an umbrella premium can cost a few hundred dollars a year but you’ll get a $1 million shield for your assets. If you can afford it, and you have the assets to protect, an umbrella policy is recommended.
In order to qualify for an umbrella policy, you are typically required to have the maximum split limit policy. For example, at GEICO, your auto insurance coverage has to max out at $300,000 for bodily injury and $100,000 of property damage. Other insurers may have different requirements.
Examples of the auto insurance coverage under an umbrella policy:
The primary auto insurance policy can only do so much in a multiple vehicle collision. “Most people do not realize that if they get into an accident and hit multiple cars or injure multiple people, there is a cap on the primary auto policy. That is why is recommended to have an umbrella policy that sits over and above these limits,” said Clement.
Loss of income
If an accident takes a neurosurgeon out of commission for six months, you may be at risk for their loss of income. According to the 2012 MGMA Physician Compensation Report, a surgeon makes on average $775,968 a year. For those six months they spent recuperating, their foregone salary totaled $387,984. The foregone salary alone would have cleared out your maximum policy with approximately $88,000 out of pocket, assuming you had the highest level of protection from GEICO and without factoring in the cost of medical care. In this case, an umbrella policy could protect you from paying the additional damages, particularly if you are a high net worth individual.
What car insurance coverages should I have?
A standard full-coverage car insurance policy may include other common coverages, in addition to bodily injury and property damage liability coverage. These standard auto insurance coverages include comprehensive and collision coverage, personal injury protection (PIP), medical payments and uninsured/underinsured motorist coverage.
While liability car insurance coverage is required in every state, except for New Hampshire, these additional coverages are often recommended for many drivers. In fact, PIP and uninsured motorist coverage are commonly required in many states. Below, we briefly describe each of these types of car insurance coverage and when you should get them.
|Car insurance coverage||Description||You should get it if…|
|Collision and comprehensive coverage||Covers damages to your car||...your car is worth more than $2,000.|
|Personal injury protection (PIP) & medical payments||Offers bodily injury reimbursement for the costs of physical harm to you or your passengers in an accident||...it is mandated in your state or you don't have health insurance.|
|Uninsured/underinsured motorist coverage||Protects you in accidents involving an at-fault, uninsured or underinsured driver||...it is mandated in your state or you don't have PIP or collision insurance.|
We typically recommend that drivers have both collision and comprehensive coverage on their policy, especially if their car has a value greater than $2,000. Deductibles for collision and comprehensive coverage are usually no more than $2,000, so having this kind of car insurance coverage is worthwhile when your car has a value higher than this amount. Importantly, collision and comprehensive coverage differs from personal liability in that it protects physical damage to your car, whereas personal liability protects you from damages filed by a third party in an accident.
While carrying collision and comprehensive coverages will add to your annual premium, damages in an accident can escalate quickly. Even if a car suffers just $5,000 worth of damages in a collision claim, this amount is still likely greater than what you would have saved by paying for the coverage and the deductible.
Uninsured and underinsured motorist coverage is required in approximately half of U.S. states and is typically inexpensive relative to other types of coverage. According to the Insurance Research Council (IRC), more than one in eight drivers in the U.S. are uninsured. Because getting into an accident with an uninsured driver can be costly, and the resulting damages wouldn't be covered by your liability coverage, we typically recommend getting uninsured/underinsured motorist coverage at a value similar to your bodily injury and property damage liability coverage limits.
If your state does not require personal injury protection (PIP) or medical payments coverage, you may consider opting out of either coverage, as long as your health insurance policy covers car accidents.
The information in this article is accurate as of the date of publishing.