How much auto insurance do I need?

Last Updated: 7/21/26

This is one of the most common questions people ask when shopping for coverage—and one of the hardest to answer with a single number. The right amount of auto insurance varies from person to person, even if two people drive the exact same car.

Here's a practical framework for figuring out what makes sense for you.

Start with what's required

Every state sets its own minimum auto insurance requirements. At a minimum, you'll likely need liability coverage—which pays for injuries and property damage you cause to others in an at-fault accident.

Beyond liability, some states also require:

• Uninsured/underinsured motorist (UM/UIM) coverage—protection if you're hit by a driver with no insurance or not enough to cover your losses
• Personal injury protection (PIP)—covers your own medical costs after an accident, regardless of fault, and sometimes lost wages

State minimums are a legal floor, not a coverage recommendation. They're often not enough to fully protect you in a serious accident.

If you're still paying off your car, full coverage is typically required

Most auto lenders require you to carry both collision and comprehensive coverage until your loan is paid off. This protects their financial interest in the vehicle. If you're leasing, your lease agreement will spell out the minimums.

Once your loan is paid in full, you have more flexibility—but that doesn't automatically mean you should drop coverage.

How to think about coverage once your car is paid off

This is where your personal financial situation matters most. Two people can own the exact same vehicle and reasonably need different levels of coverage. Consider two scenarios:

Scenario 1: Limited savings, higher risk exposure

If you don't have significant savings set aside to cover unexpected expenses, carrying more coverage makes sense. Without collision and comprehensive, a single accident, hailstorm, or theft could mean a large out-of-pocket bill with no insurer to help. A higher premium buys real peace of mind when your financial cushion is thin.

Scenario 2: Healthy savings, older vehicle

If you have enough in savings to comfortably cover a deductible—and your car's value has depreciated significantly—it may make sense to carry only state-required minimums. The calculus is straightforward: if your annual premium for collision and comprehensive costs more than the car is worth, you're paying more in coverage than you could ever collect in a claim.

Neither approach is wrong. It's about being honest with yourself about how much financial risk you're prepared to absorb.

Questions to ask yourself before choosing your coverage

Use these to guide your decision:

What are my state's minimum liability requirements? Your insurer or state's department of insurance can tell you. These are the legal baseline—not the recommended amount.

Is PIP required or available in my state? PIP isn't offered everywhere. If it's not available, ask about medical payments (MedPay) as an alternative for covering your own injury costs.

Does my state require UM/UIM coverage? If not, think about whether you could cover your own costs if you were hit by an uninsured driver. If the answer is no, it's worth adding.

What is my car actually worth? If your vehicle's market value is low, paying for collision and comprehensive may not be cost-effective. A quick check of your car's estimated value can help you decide.

Could I cover my deductible out of pocket today? If a $1,000 or $2,000 deductible would strain your finances, a lower deductible—or keeping more comprehensive coverage—may be the smarter move.

Do I have any add-on coverage needs based on where I live? Drivers in areas prone to severe weather, flooding, or high rates of theft may have more reason to maintain comprehensive coverage than those in lower-risk areas.

What about liability limits—how high should they be?

State minimums for liability are often lower than what you'd actually need to cover a serious accident. If you're found at fault and your liability limits are exhausted, you could be personally responsible for the remainder.

As a general rule: the more assets you have to protect, the higher your liability limits should be. If you own a home, have savings, or have other assets, higher liability limits are worth the modest increase in premium.

The bottom line

There's no universal answer to how much auto insurance you need. The right coverage is shaped by your state's requirements, your lender's requirements, your vehicle's value, and—most importantly—your financial situation and comfort with risk.

If you want to talk through your options, we can help. At Branch, we can get your quote started with just a name and address.

Not available in every state. Coverage and discounts may vary. Subject to eligibility requirements. Insurance is underwritten by the Branch Insurance Exchange or an unaffiliated insurance carrier through Branch Financial, Inc., a licensed insurance agency. See branch.com for more details.