Car Insurance Requirements by State

Car insurance is required by law in 49 out of 50 states and the District of Columbia. New Hampshire is the only state that does not require drivers to carry auto insurance, though it does require drivers to demonstrate financial responsibility if they cause an accident. Virginia allows drivers to pay a $500 uninsured motor vehicle fee as an alternative to purchasing insurance, though this fee provides no coverage and leaves the driver fully exposed to liability.

Every state that requires auto insurance mandates at minimum liability coverage, which pays for injuries and damage you cause to others in an accident. Liability coverage is typically expressed as three numbers representing the per-person bodily injury limit, per-accident bodily injury limit, and property damage limit. For example, a state that requires 25/50/25 requires $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 per accident for property damage.

Beyond liability, some states require additional coverages including personal injury protection (PIP), uninsured motorist coverage, and medical payments coverage. These additional requirements vary significantly from state to state, making it important to understand the specific laws in your state. Driving in a state where you do not live may also subject you to that state's insurance requirements, so understanding the rules in states you frequently travel through is prudent.

It is important to note that state minimum requirements represent the absolute least amount of coverage you can legally carry, not a recommendation for adequate coverage. In most cases, state minimums provide significantly less protection than what most financial advisors and insurance professionals recommend.

State minimum liability requirements vary widely, reflecting different legislative approaches to financial responsibility. Understanding where your state falls helps you evaluate whether the minimum is adequate for your situation.

Several states set very low minimums that may leave you significantly underinsured in a serious accident. California requires only 15/30/5, meaning $15,000 per person bodily injury, $30,000 per accident bodily injury, and just $5,000 in property damage. Given that the average new car costs over $45,000, a $5,000 property damage limit is clearly insufficient. Pennsylvania and New Jersey also set low minimums at 15/30/5.

Many states fall in the moderate range with requirements of 25/50/25 or 30/60/25. States in this group include Colorado, Connecticut, Georgia, Indiana, Massachusetts, and many others. These minimums provide somewhat better protection but still fall short of what is needed for a serious accident involving injuries.

A few states require higher minimums that provide better baseline protection. Alaska requires 50/100/25. Maine requires 50/100/25. Michigan requires unlimited personal injury protection benefits, making it one of the most protective states for accident victims. New York requires 25/50/10 in liability but also mandates PIP, uninsured motorist, and supplementary uninsured motorist coverage.

Texas requires 30/60/25, Florida requires 10/20/10 (among the lowest in the nation), and Illinois requires 25/50/20. These are just the legally mandated minimums. In practice, insurance professionals recommend carrying at least 100/300/100 in liability coverage, with many recommending even higher limits for drivers with significant assets to protect.

Twelve states and the District of Columbia operate under a no-fault auto insurance system, which requires drivers to carry personal injury protection (PIP) coverage. In no-fault states, after an accident, each driver's own insurance pays for their medical expenses and lost wages regardless of who caused the accident. This system is designed to reduce lawsuits and speed up the payment of medical claims.

The no-fault states are Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. Each has different PIP requirements and different thresholds for when an injured party can step outside the no-fault system and file a lawsuit against the at-fault driver.

PIP coverage limits vary by state. Michigan historically provided unlimited lifetime PIP benefits, making it unique among all states. Recent reforms now allow Michigan drivers to choose from several PIP coverage levels. Florida requires only $10,000 in PIP coverage. New York requires $50,000 in PIP. The required limits in other no-fault states generally fall between $10,000 and $50,000.

In no-fault states, you can typically sue the at-fault driver only if your injuries exceed a specified threshold. This threshold may be defined as a dollar amount (monetary threshold) or as a description of the severity of injuries (verbal threshold). States with verbal thresholds generally require serious, permanent, or disfiguring injuries before a lawsuit is permitted. The specific threshold in your state affects how PIP and liability coverage work together to protect you.

Approximately 20 states require drivers to carry uninsured motorist (UM) coverage, which protects you when you are injured by a driver who has no insurance. Some of these states also require underinsured motorist (UIM) coverage, which protects you when the at-fault driver has insurance but not enough to cover your damages. In states where UM/UIM is not required, it is strongly recommended.

States that require uninsured motorist coverage include Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire (for those who choose to carry insurance), New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, West Virginia, and Wisconsin. The required limits vary, with some states mandating limits equal to your liability limits and others setting specific minimum amounts.

Despite state requirements and penalties, an estimated 12 to 14 percent of drivers nationwide are uninsured. In some states, the uninsured driver rate exceeds 20 percent. This means there is a meaningful chance that if you are in an accident caused by another driver, that driver may not have insurance. Uninsured motorist coverage fills this gap and is one of the most important coverages you can carry.

Some states allow you to reject UM/UIM coverage in writing, even if it is offered by default. Financial advisors and insurance professionals strongly recommend against rejecting this coverage. The cost is relatively modest, typically adding 5 to 10 percent to your overall premium, while the protection it provides is substantial.

State minimums are designed as a floor for financial responsibility, not as a recommendation for adequate coverage. In practice, state minimum coverage is often insufficient to cover the costs of a serious accident, particularly one involving injuries, hospitalization, or a total vehicle loss.

Consider this example: you are at fault in an accident in a state with 25/50/25 minimums. The other driver requires emergency surgery and a week of hospitalization, with medical bills totaling $150,000. The other driver's vehicle, a two-year-old SUV, is totaled, with a replacement value of $40,000. Your minimum policy pays $25,000 toward the medical bills and $25,000 toward the vehicle. You are personally responsible for the remaining $125,000 in medical bills and $15,000 in vehicle damage, totaling $140,000 out of your own pocket.

Insurance professionals generally recommend carrying at least 100/300/100 in liability coverage. Drivers with significant assets, including home equity, savings, and investments, should consider even higher limits or a personal umbrella policy that extends coverage to $1 million or more. The cost difference between minimum and recommended coverage is often surprisingly modest, typically $200 to $500 per year more.

CPK Insurance can help you evaluate your coverage needs based on your assets, driving habits, and state requirements. We can show you the cost difference between minimum and recommended coverage levels so you can make an informed decision. In our experience, drivers who understand the true cost of inadequate coverage almost always choose to carry more than the minimum. Contact us for a car insurance quote tailored to your needs.