Why Your Car Insurance Might Not Be Meeting State Standards

If you're buying a new car or moving to a new state, it's important to get up to speed on your state's minimum requirements for car insurance. Every state has its own rules for the minimum amount of car insurance to meet state standards. If you're not careful, you could run afoul of state laws -- and risk catastrophic financial costs.

Let's look at a few of the most common state standards for car insurance and how you can get your car covered with the right policy.

Most states (48 out of 50) require minimum car insurance

Unless you live in Virginia or New Hampshire, your state will require you to have a minimum amount of auto liability insurance coverage. New Hampshire allows drivers to go uninsured at their own risk, while Virginia allows people to drive without auto insurance if they pay a $500 fee when renewing their car registration.

Even if your state allows it, being an uninsured driver is a recipe for financial disaster. Can you really afford to repair your own car in case of a car crash, and do you want to be on the hook for paying for other people's car repairs and medical care out of pocket?

According to the Insurance Information Institute, as of 2022, the average auto liability claim was $5,313 for property damage and $24,211 for bodily injury. And those are just the average costs, let alone the catastrophic costs of medical bills in case someone gets severely injured and needs lengthy hospitalization and long-term care. The worst-case scenario costs of a car crash can be ruinous.

Laws and minimum regulatory standards are often for people's own good. A world where everyone drove without insurance would be chaotic, expensive, and harmful to human life. For these reasons, it's a good thing that 48 out of 50 states require you to have a minimum amount of auto insurance.

A common state standard: 25/50/25 liability insurance

Different states have different specific requirements for auto liability insurance. But one of the most common state standards (required by a total of 10 states), is 25/50/25 coverage. This minimum standard coverage means that your auto insurance policy must have at least:

• $25,000 of bodily injury liability coverage per person
• $50,000 of bodily injury liability coverage per accident
• $25,000 of property damage liability coverage per accident

When you consider that the average liability claim involves $24,211 of bodily injury costs and $5,313 of property damage, this minimum standard might seem like enough insurance coverage. But not all car crashes are "average." In case you get in a more severe collision, your financial vulnerability could skyrocket.

How to get state standard minimum car insurance

The best car insurance companies will want to sell you an auto insurance policy that meets your state's minimum standards -- and more. After all, insurance companies make money by selling you more than just the bare minimum. Unless your car is very old and not worth repairing, getting collision insurance and comprehensive insurance coverage can often be the smartest move for your personal finances.

But if you want to see for yourself if your car insurance meets state standards, go to your state's Department of Insurance, Insurance Division, or other state insurance regulator. Your state's minimum car insurance requirements should be posted publicly and easy to check.

Here are a few current state-specific examples from some of America's biggest states:

• California: The California Department of Insurance website says that California drivers are required to have a minimum 15/30/5 auto liability coverage (only $5,000 for property damage liability).
• New York: The New York State Department of Financial Services website says that New York drivers are required to carry minimum auto liability coverage of 25/50/10.
• Texas: The Texas Department of Insurance website says that Texas drivers are required to have minimum auto liability coverage of 30/60/25.

Bottom line

In 2024, many people are struggling with high costs of car insurance and trying to change their policies to save money. You might be tempted to cut your liability coverage down to the state minimum to save money on premiums. But getting only the bare minimum liability coverage can be a short-sighted move that leaves you vulnerable to ruinous costs.

State minimum coverage will help you obey the law, but it won't save your bank account from the most expensive car crashes. Talk to your insurance company and get auto insurance price quotes for higher levels of liability coverage, so you're protected from the worst-case scenarios at the wheel.