What Auto Insurance Limits Should I Have?

Last Updated on October 18, 2026

By James Shaffer Reviewed by Thomas Rockford, insurance industry executive and financial analyst, on October 18, 2026 How we fact-check

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.

State minimum liability requirements are often far too low to protect against real-world accident costs.
Dave Ramsey’s team recommends at least $500,000 in liability coverage (250/500/250 as split limits), and the Insurance Information Institute says most people need more than the state minimum.
Drivers with assets—homes, savings, investments—should carry higher limits to avoid lawsuits and personal financial exposure.
Raising limits costs less than many drivers expect. Insurance.com’s sample rates put the step from the state minimum to 50/100/50 at about $122 a year on average, though your own quote depends on your insurer, state and record.

Table Of Contents

You Are Legally Required to Have a Certain Amount of Auto Insurance
It’s Recommended You Exceed the Minimum State Requirements
Minimum Car Insurance Requirements by State
How Much Car Insurance Should You Really Have?
Auto Insurance Limits FAQs
Conclusion: How Much Risk Are You Comfortable With?
Sources

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

Every state except New Hampshire requires drivers to carry minimum liability insurance. Virginia used to let drivers pay a fee instead, but that option ended July 1, 2024.

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’s team recommends at least $500,000 in liability coverage, or 250/500/250 as split limits, and an umbrella policy once your net worth passes $500,000 (Ramsey Solutions, updated May 12, 2025). The Insurance Information Institute names no figure but says most people need more than the minimum, and it puts a $1 million umbrella policy at roughly $200 to $300 a year.

Why? Because many states require as little as:

$15,000 of bodily injury liability per person (Pennsylvania), and Florida requires no bodily injury liability at all for most drivers, only $10,000 of personal injury protection
$5,000 of property damage liability (Pennsylvania) or $10,000 (Florida and several other states)

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: $30,000 per person / $60,000 per accident
Property Damage Liability: $15,000
Uninsured motorist coverage: not part of the legal minimum, though insurers offer it and it is worth having

When insurers advertise limits such as 30/60/15, they mean:

$30,000 bodily injury per person
$60,000 bodily injury per accident
$15,000 property damage

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

The full table of every state’s minimums lives on our state-by-state auto insurance requirements page, which we keep current. Several states have raised their minimums since 2025, so check that page rather than an older chart.

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 hypothetical:

You carry 25/50/25, a common state minimum, and cause a crash that totals a $50,000 SUV. You also injure a family of three whose medical bills come to $120,000.

In that hypothetical your insurer pays $25,000 toward the SUV and no more than $50,000 for all the injuries combined. You’re responsible for the remaining $95,000, before any lost wages or pain-and-suffering claims are added on top.

This is why advisers like Ramsey’s team suggest:

$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.

Auto Insurance Limits FAQs

Is the state minimum insurance enough?

In most cases, no. State minimums are often too low to cover real-world accident costs. If damages exceed your limits, you must pay the difference out of pocket. Most experts recommend carrying higher limits than the minimum required by law.

How much liability coverage do experts recommend?

Dave Ramsey’s team recommends at least $500,000, or 250/500/250 as split limits, and an umbrella policy once your net worth passes $500,000. The Insurance Information Institute says most people need more than the state minimum and puts a $1 million umbrella policy at roughly $200 to $300 a year.

What auto insurance limits should I choose if I have few or no assets?

If you’re young or have limited assets, you may be comfortable carrying lower coverage since there’s less for someone to collect in a lawsuit. Still, you should consider increasing your liability limits for better protection if you can afford it.

What limits should I choose if I own a home or have savings?

Drivers with assets should choose higher liability limits—typically $250,000/$500,000 or greater—to protect themselves from lawsuits. In major accidents, minimum limits are almost always insufficient.

How do I know if my current limits are high enough?

Ask yourself whether you could afford to pay out of pocket if an accident caused damages worth $50,000, $100,000, or even $300,000. If not, you likely need higher liability limits.

Does full coverage include higher liability limits?

No. ‘Full coverage’ generally refers to liability, collision, and comprehensive coverage. Your liability limits can still be low, even if you have full coverage. You must choose your liability limits separately.

Is increasing my limits expensive?

Usually less than people expect. Insurance.com’s sample rates (2022 rates from Quadrant for a 40-year-old driver with a clean record) put the step from the state minimum to 50/100/50 at about $122 a year on average, and it says going on to 100/300/100 costs a little more. Those are sample-rate averages, not quotes; your own difference depends on your insurer, state and record, so ask for the price at both levels.

Can I be sued for damages beyond my insurance limits?

Yes. If you cause an accident and damages exceed your policy limits, you’re legally responsible for the remaining amount. That’s why choosing adequate liability coverage is critical—especially if you have assets to protect.

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 sharply reduce your financial risk in a serious accident, and the price difference is usually smaller than drivers expect, so get the quote at two or three levels before you decide.

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?

My advice is to add up what you own and what you earn, then buy liability limits that cover that number, which for most homeowners means 100/300/100 at the least and 250/500 if you can. Ask your agent for the premium at the minimum, at 100/300 and at 250/500 side by side; the jump is usually small enough that the choice makes itself.

Sources

Checked October 18, 2026

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