TL;DR — Quick Coverage Answer
- State minimums often don't protect your assets — most require only 25/50/25 liability, which won't cover a serious accident
- Financial experts recommend 100/300/100 as the baseline for adequate protection ($100k per person, $300k per accident, $100k property damage)
- Go higher if you have significant assets — your net worth exceeds your liability limits? You're personally at risk
- Full coverage costs more but protects your vehicle — collision and comprehensive coverage matter if you can't afford to replace your car tomorrow
Sarah rear-ended someone at a red light in Denver last year. Minor accident, right? Two people in the other car needed medical treatment. Her Colorado state minimum 25/50/25 policy covered $50,000 total. The settlement? $127,000. She's still making monthly payments on the difference.
This happens more than you'd think.
State Minimum Requirements Don't Match Real-World Accident Costs
Every state requires different minimum liability coverage. Here's what that actually means: the first number is bodily injury per person, second number is bodily injury per accident, third is property damage. So 25/50/25 means $25k per injured person, $50k max per accident, $25k for damaged property.
Those numbers sound reasonable until you see what medical care actually costs.
| State | Minimum Liability | State | Minimum Liability |
|---|---|---|---|
| California | 15/30/5 | New York | 25/50/10 |
| Texas | 30/60/25 | Florida | 10/20/10 (PIP) |
| Illinois | 25/50/20 | Pennsylvania | 15/30/5 |
| Ohio | 25/50/25 | Georgia | 25/50/25 |
| North Carolina | 30/60/25 | Michigan | 50/100/10 (PIP) |
| Virginia | 25/50/20 | Washington | 25/50/10 |
Notice how California requires only $5,000 property damage coverage? A new Honda Accord costs $30,000. You total one and you're personally liable for $25,000 out of pocket.
The 100/300/100 Standard — Why Financial Advisors Push This Number
When insurance agents talk about "adequate coverage," they mean $100,000 per person injured, $300,000 per accident, and $100,000 property damage. This isn't random — it's based on actual accident cost data and lawsuit outcomes.
Here's the reality: a two-car accident with serious injuries easily hits $200,000-$300,000 in medical bills alone. Physical therapy runs $5,000-$15,000. Surgery? $30,000-$100,000. Lost wages, pain and suffering, legal fees — it adds up faster than people expect.
"If your net worth exceeds your liability limits, you're essentially self-insuring the difference. That's financial Russian roulette." — Sarah Chen, CFP
If your assets (home equity, savings, investments) total more than your liability coverage, a serious at-fault accident could wipe you out. The court doesn't care that you only bought state minimum insurance — they'll come after your house, your retirement accounts, your future wages.
When should you go even higher than 100/300/100? Consider 250/500/100 or umbrella policies if you:
- Own a home worth more than $200,000
- Have retirement savings exceeding $100,000
- Earn above $75,000 annually (future wages can be garnished)
- Have teenage drivers on your policy
- Commute in heavy traffic daily
When Minimum Coverage Actually Makes You Personally Liable
Look, minimum coverage exists to get the cheapest possible insurance card for your glove box. It's not designed to actually protect you financially.
Real talk: we see claims exceed state minimums in about 40% of accidents involving injuries. The average bodily injury claim in 2026 runs $76,000. Property damage averages $8,400. Your state requires 25/50/10? You're exposed.
You cause an accident. Two people injured. Medical bills total $180,000. Your 25/50/25 policy pays $50,000. You're personally sued for $130,000. Your wages are garnished. Your savings account is levied. You might lose your house.
Same accident. Same $180,000 in bills. Your 100/300/100 policy covers it entirely. You pay your deductible and maybe see a rate increase, but your assets are protected. You sleep at night.
Umbrella policies that provide $1-2 million in additional liability coverage typically cost only $200-400 annually. That's roughly $20-30/month for protection that could save your entire financial future.
Here's a simple decision framework:
Add up home equity, savings, investments, retirement accounts — anything a lawsuit could touch.
Your total liability coverage should equal or exceed your net worth. Period.
Long commutes, teenage drivers, high-income job? Bump coverage higher and add umbrella protection.
Full Coverage Components Beyond Basic Liability
Liability protects other people when you cause an accident. But what about your car?
Full coverage adds collision (pays for your car damage regardless of fault) and comprehensive (theft, vandalism, weather, hitting a deer). If you're financing or leasing, your lender requires both. Once you own the car outright, they're optional.
The math changes as cars age. General rule: when your car's value drops below 10 times your annual comprehensive and collision premium, drop those coverages. A 2015 sedan worth $4,000? If you're paying $600/year for comp and collision, you're better off self-insuring.
Uninsured/underinsured motorist coverage matters more than most people realize. About 13% of US drivers have no insurance. Another 20% carry only state minimums. If one of them hits you and you're seriously injured, your UM/UIM coverage pays your medical bills and lost wages.
We recommend matching your UM/UIM limits to your liability limits. If you're carrying 100/300/100 liability, get 100/300 UM/UIM. It typically adds only $75-150 annually.
The Bottom Line
State minimums are legal compliance, not financial protection. The question isn't "what's the cheapest insurance I can buy?" — it's "how much would it cost me if I cause a serious accident tomorrow?" Most people should carry at least 100/300/100 liability. If you own a home or have significant assets, go higher or add umbrella coverage. The $300-600 annual difference could save you from bankruptcy.
What is the minimum car insurance required by law?
It varies by state, but most require 25/50/25 liability coverage ($25k per injured person, $50k per accident, $25k property damage). Some states like California require as little as 15/30/5. New Hampshire and Virginia allow you to drive without insurance if you pay a fee or post a bond.
Is 100/300/100 car insurance enough?
For most middle-class families, yes — it covers typical serious accidents. But if your net worth exceeds $300,000 (home equity plus savings plus investments), consider 250/500/100 or a $1-2 million umbrella policy. High-net-worth individuals should absolutely carry umbrella coverage.
How do I know if I need more than minimum coverage?
Simple test: Could you write a check for $100,000 tomorrow without losing your house or draining retirement accounts? If no, you need more than minimum coverage. If you own a home, have kids, or earn above median income, state minimums leave you dangerously exposed to lawsuits.
The right coverage level protects what you've built while keeping premiums reasonable. Most drivers overpay for collision on old cars while underbuying liability that actually protects their financial future.