What Auto Insurance Limits Should I Have?

Last Updated on December 8, 2025

Auto insurance limits can be confusing. Some people choose the lowest limits because they “never get into accidents,” while others buy far more coverage than they realistically need and end up overspending for years. So what auto insurance limits should you actually carry?

Below, we break down what’s legally required, what experts recommend, and how to choose limits based on your financial situation and risk tolerance.

Key Takeaways

• State minimum liability requirements are often far too low to protect against real-world accident costs.
• Financial experts recommend carrying at least $250,000–$500,000 in liability coverage (or more if you have significant assets).
• Drivers with assets—homes, savings, investments—should carry higher limits to avoid lawsuits and personal financial exposure.
• Many drivers choose to exceed state minimums because the additional coverage is often inexpensive relative to the protection it provides.

You Are Legally Required to Have a Certain Amount of Auto Insurance

Every state except New Hampshire (and, in limited situations, Virginia) requires drivers to carry minimum liability insurance.

Liability insurance pays for:

• Medical expenses of people you injure
• Property damage you cause (e.g., another driver’s vehicle, fences, buildings)

This protects other drivers and shields your assets from lawsuits—up to the limit of your policy. But liability insurance does not cover damage to your own vehicle.

In most states, liability insurance is the bare minimum you must carry to drive legally.

It’s Recommended You Exceed the Minimum State Requirements

While every state sets minimum liability requirements, most insurance agents and financial planners strongly recommend carrying more than the minimum.

Personal finance expert Dave Ramsey recommends at least $500,000 in liability coverage. Many experts agree.

Why? Because many states require as little as:

• $10,000 or $20,000 of bodily injury liability
• $10,000 of property damage liability

These amounts are extremely low. In a serious accident, property damage and medical bills can exceed minimum limits within minutes. Once your insurer pays up to your limit, you are responsible for the rest out of pocket.

This is why many drivers choose to double or triple their state minimums—or buy full coverage, which includes liability, collision, and comprehensive coverage.

Minimum Car Insurance Requirements by State

Every state has different minimum insurance requirements. For example, here are California’s minimum limits:

• Bodily Injury Liability: $15,000 per person / $30,000 per accident
• Property Damage Liability: $5,000
• Uninsured Motorist Bodily Injury: $15,000 per person / $30,000 per accident
• Uninsured Motorist Property Damage: $3,500

When insurers advertise limits such as 15/30/10, they mean:

• $15,000 bodily injury per person
• $30,000 bodily injury per accident
• $10,000 property damage

These are minimums—not ideal protection levels. If an accident exceeds these limits, you pay the difference out of pocket.

These are the most recent insurance requirements per state:

How Much Car Insurance Should You Really Have?

There’s a big difference between minimum required limits and recommended limits. The right choice depends on your finances and how much risk you’re comfortable taking on.

Here’s a helpful guideline:

• If you’re young with few or no assets: You may not need high liability limits. If someone sues you, there may be little for them to collect.
• If you’re older with savings, a home, or investments: Higher limits are essential. You risk losing assets if damages exceed your insurance coverage.

Consider this scenario:

You carry $10,000 in property damage liability and cause a crash involving an SUV worth $50,000. You also injure a family with medical bills totaling $120,000.

Your insurer pays the first $10,000 for property damage and $10,000 for injuries. You’re responsible for the remaining $150,000+.

This is why many drivers purchase:

• $250,000–$500,000 liability limits
• Or even $1 million to $2 million in coverage through umbrella policies

The more assets you have, the more liability protection you need.

Conclusion: How Much Risk Are You Comfortable With?

Generally, if you can afford it, you should buy more than your state’s minimum required auto insurance. Higher limits dramatically reduce your financial risk in a serious accident and often cost only a few extra dollars per month.

If you’re on a tight budget, carrying only the state minimum might be your only option—but understand that the protection is minimal. Many drivers prefer $100,000, $250,000, or even $500,000 liability limits for peace of mind.

Ultimately, the right limits depend on your income, assets, and risk tolerance. Are you willing to pay a little more now to avoid a potential financial disaster later? Or would you rather save money now and hope you never face a major claim?