Here’s a breakdown of how we reviewed and rated the top auto insurance providers
Key Takeaways
- Every state except New Hampshire requires some amount of liability auto insurance.
- If you have a car loan or lease, your lender will likely require you to carry full-coverage car insurance.
- The national average cost of liability car insurance is $61 per month or $736 per year.
Not sure how much car insurance you actually need? You’re not alone. In this guide, we at the MarketWatch Guides team will break down minimum coverage requirements by state. Plus, we’ve rounded up some of the best car insurance companies — because shopping around is one of the easiest ways to score a lower rate.
Learn more about our methodology and editorial guidelines.
Is Car Insurance Required?
Yes, car insurance is required in all states except New Hampshire. To drive legally, you’ll need to purchase at least the minimum coverage limits. Where you live will determine the state minimum required insurance you’ll need to carry for your car to be considered street-legal.
This generally includes a certain amount of liability insurance. Liability coverage ensures that if you cause an accident, the other parties’ medical bills and repair bills will be taken care of. It does not cover any damage to your own car or your injuries after an accident you’re found at fault for.
Car Insurance Requirements
Each state sets its own minimum liability insurance requirements, which you’ll often see broken down into three numbers. It’s important to note that insurance costs vary significantly by state based on these requirements and other local factors. For example, California requires drivers to purchase at least $30,000 in bodily injury liability coverage per person, $60,000 in bodily injury liability coverage per accident and $15,000 in property damage per accident.
Liability coverage is broken down into two parts:
- Bodily injury liability: Covers medical expenses and lost wages for individuals other than the at-fault driver
- Property damage liability: Reimburses another party for damage to their vehicle or property when the policyholder is at fault for an accident
Car Insurance Required in Some States
States may also mandate additional coverage besides bodily injury and property damage liability coverage. Here are some other common types of insurance you might need to carry depending on where you live:
| Coverage Type | Required in | Description |
|---|---|---|
| Uninsured motorist/ underinsured motorist coverage (UM/UIM) | • Connecticut • District of Columbia • Illinois • Indiana • Kansas • Maine • Maryland • Massachusetts • Minnesota • Missouri • Nebraska • New Hampshire (if you opt for car insurance) • New Jersey • New York • North Carolina • North Dakota • Oregon • South Carolina • South Dakota • Vermont • Virginia • West Virginia • Wisconsin | Uninsured motorist coverage comes into play if your car is hit and the person at fault has insufficient liability insurance or no insurance at all. It offers assistance for medical expenses, lost wages and car damage. |
| Medical payments coverage (MedPay) | • Maine • New Hampshire (if you opt for car insurance) | MedPay covers medical bills for the policyholder and other passengers, regardless of fault. |
| Personal injury protection (PIP) | • Delaware • Florida • Hawaii • Kansas • Massachusetts • Michigan • Minnesota • New Jersey • New York • North Dakota • Oregon • Pennsylvania • Utah | Similar to MedPay, PIP insurance pays for medical bills. It also covers lost wages, funeral expenses and child care in certain situations. |
Another Option: Self-Insured Car Insurance
In some states, it’s possible to “self-insure,” which means forgoing traditional car insurance by showing your state proof of financial responsibility. Usually, this requires depositing a certain amount of money within a bond or a special account — only to be used if you get into a car accident. The amount you’re required to pay up front could be anywhere from $35,000 to $300,000, depending on the state.
Is State Minimum Insurance Enough?
Assessing how much car insurance you need breaks down into two factors: where you live and what car you drive. As mentioned, a liability insurance policy is required in some form by almost every state. In addition to that, the value of the car you drive and whether you own it outright dictates what optional kinds of insurance you may want to carry.
How Much Liability Insurance Do I Need?
The risk of purchasing the minimum amount of car insurance is that a driver may not be totally covered after a car accident. If a California driver carrying the bare-minimum coverage causes $35,000 in property damage, they wouldn’t have enough liability insurance to cover the costs. The remaining $30,000 would have to come out of their pocket, and if they were not able to pay, they could be sued.
Car Insurance Liability Limits
As a general precaution, insurance experts recommend choosing the largest liability limit you can afford. That helps to protect your wallet and protect you from lawsuits in the event of an at-fault accident. Understanding what factors affect your car insurance costs can help you make informed decisions about coverage levels.
According to 2025 data from Quadrant Information Services, the national average cost of liability auto insurance is $736 per year or $61 per month. Higher coverage limits usually mean a higher premium, but other factors like your car, driving record and credit score also shape the price of a high or low insurance rate.
Do I Need Full Coverage on My Car?
If you’re shopping for insurance, you’ve probably seen the term “full coverage” mentioned a few times. This generally refers to a policy that combines liability car insurance, collision insurance and comprehensive insurance.
Here’s an overview of what each of these policies covers:
| Liability insurance | Covers other parties’ injuries and property damage after an accident for which you are found at fault |
| Collision insurance | Covers your own vehicle’s damages after an accident, regardless of who is at fault |
| Comprehensive insurance | Covers repairs if your own vehicle is stolen or is damaged in an incident that isn’t a collision with another car, such as a natural disaster or hitting an animal |
Neither collision nor comprehensive coverage is mandated by law in any state, but you may need it if you have an outstanding car loan or lease. Lenders often require that drivers purchase additional coverage in order to protect their investment.
If a car is damaged and declared a total loss, depending on the claim, comprehensive or collision insurance will reimburse the policyholder up to the actual cash value of the vehicle, minus an agreed-on deductible. Understanding how deductibles work is crucial when selecting your coverage amounts. If the car is being financed, that payout will go to the lienholder.
Each of these coverages is required in certain states but can be purchased optionally elsewhere.
Do I Need Full Coverage on a Financed Car?
Taking out an auto insurance policy on a financed vehicle may mean purchasing more than just liability coverage. As mentioned, lenders generally require car owners to carry collision and comprehensive coverage because these types of insurance pay for damage to a vehicle that the lender legally owns. Learn more about whether full coverage is required for financed vehicles to understand your obligations.
Newer cars may be more expensive to insure if they have a high value or are expensive to repair, so a lender may ask for higher coverage limits. That usually means a larger insurance premium for the car owner.
Do I Need Gap Insurance If I Have Full Coverage?
In addition to comprehensive and collision coverage, a lienholder may ask that a driver purchase gap insurance as well. “Gap” stands for guaranteed asset protection, and the coverage assists the policyholder when a financed car is totaled.
After a total-loss accident, if your insurer pays out the actual cash value of your car and it does not cover the amount you still owe on the vehicle, gap insurance pays the difference. For example, if you owe $15,000 and your insurer values your vehicle at $10,000 after a total-loss accident, gap insurance will pay most or all of the remaining $5,000 balance. When shopping for this type of coverage, comparing gap insurance providers can help you find the best rates and terms.
Additional Car Insurance Coverage
Outside of liability and full-coverage insurance, there are a number of add-on policies that offer coverage for other costs related to car ownership. While they do add to your insurance rates, some offer a good value and peace of mind on the road. These include:
Car Insurance Add-Ons
Though not required, customers can purchase the following coverage types:
| Roadside Assistance | Covers breakdowns, lockout services and towing needs |
| Rental Reimbursement | Covers rental car or taxi services if your primary vehicle is in the shop due to a covered repair |
| New car Replacement | Usually only applies to newer vehicles and will help you purchase a new vehicle if your car is deemed a total loss |
| Umbrella Insurance | Extra insurance beyond normal policy limits that can be used to cover injuries, property damage and other liability claims |
Not all insurance providers have these options, so be sure to ask about the coverage you want when getting a quote or contacting an insurer for information.
How Much Auto Insurance Should I Have?: FAQ
Every state except New Hampshire requires a minimum amount of liability insurance. This coverage helps pay for other drivers’ medical bills and damage to other people’s property from accidents you cause.
In order to drive legally, you’ll need to carry the minimum liability insurance required in your state. Additional coverage will depend on whether the vehicle is owned or being financed, the car’s value, your income level and your personal coverage preferences.
Lenders usually require a car owner to purchase liability, collision and comprehensive coverage when financing a car to financially protect it from damage. The lender may also ask for gap insurance to ensure a loan can be paid off if the car is totaled
Liability coverage limits are often represented by three numbers, such as 100/300/50. In this case, it would mean the driver has $100,000 worth of bodily injury coverage per person, $300,000 worth of bodily injury coverage per accident and $50,000 worth of property damage coverage per accident. These are the maximum amounts your insurer will pay out after an accident you cause.
Our Methodology:
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Cost and Discounts (25% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities are both taken into consideration.
- Industry Standing (20% of total score): Our research team considers market share, ratings from industry experts and years in business when giving this score.
- Customer Experience (15% of total score): This score is based on volume of complaints reported by the National Association of Insurance Commissioners (NAIC) and customer satisfaction ratings reported by J.D. Power. We also consider the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
- Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements score highest in this category.
Our credentials:
- 800+ hours researched
- 130+ companies reviewed
- 8,500+ consumers surveyed
Studies and Ratings We Cite
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Our provider reviews cite several key industry studies and ratings, including:
- J.D. Power 2024 U.S. Insurance Shopping Study The annual J.D. Power U.S. Insurance Shopping Study measures customer satisfaction and purchase experience with auto insurance providers based on five categories: brand, price, distribution channel, quote process and policy offerings. The study average score is 676/1,000.
- J.D. Power 2024 U.S. Auto Claims Satisfaction Study The annual J.D. Power U.S. Auto Claims Study rates the claims experience customers have with different providers based on eight categories: trust, fairness of settlement, time to settle a claim, people, communication, ease of resolving a claim, ease of starting a claim and digital channels. Car insurance providers are assessed at the national level. The study average score is 697/1,000.
- NAIC Complaint Index The National Association of Insurance Commissioners Complaint Index is a representation of the number of complaints auto insurance providers receive relative to the average number of complaints for the industry based on their size. A score of 1 represents the average number of complaints for the industry.
*Data accurate at time of publication.
