How much car insurance do I need: a worksheet beyond the state minimum

The state minimum is a legal floor, not a measure of need. Work through five checks: the floor itself, a claim sized in dollars, what you own and earn, the coverages that pay you, and a like for like quote at the limits you choose.

Estimates and published averages, not a quote. Not insurance advice. State rules and insurer rules vary. Confirm requirements with your state insurance regulator or a licensed agent in your state.

The short answer: need is a comparison, not a number everyone shares

You need at least the coverage your state requires, and enough liability coverage above that floor that a serious at-fault crash does not leave you paying the shortfall yourself. The industry and regulator sources used for this guide make the same structural point. The Insurance Information Institute states that chances are you will need more liability insurance than the state requires because accidents cost more than the minimum limits, and that a driver found legally responsible for bills above the policy limit pays the difference out of pocket. The NAIC shopping guide advises buying as much liability coverage as you can reasonably afford to protect your financial security. Neither source names a universal limit, because the right figure depends on what a claim could reach and what you have that a claim could be collected from. The worksheet below turns that into five checks you can complete with your own numbers: the legal floor, a claim sized in dollars, an inventory of what you own, the coverages that pay you rather than others, and a quote taken at the limits you choose. No figure in this guide is a recommendation for your policy; it is a worked example you replace with your own entries.

Read the three numbers before you judge any limit

Liability limits are usually written as three numbers, and the NAIC shopping guide works through the standard example of 25/50/15. The first number is the most the policy pays for bodily injury to any one person, in thousands of dollars. The second is the most it pays for all bodily injury in one crash, no matter how many people are injured. The third is the most it pays for property damage in one crash. The second number is easy to misjudge, because it is a shared cap: two serious injuries draw on the same per accident limit, not on a fresh limit each. If a policy is written as a single combined limit instead of three split numbers, the comparison method is the same: find the largest amount the policy will pay for one crash, and hold that figure against the worksheet in the next sections. Our guide to state minimum liability limits explains how the floors themselves are set state by state; this guide starts where that one ends, with the question of what sits above the floor.

Step one: write down your legal floor, and any required extras

Record the minimum your state requires for bodily injury per person, bodily injury per accident and property damage, using your state index page on this site and confirming the current figure with your state insurance regulator, since minimums change. Then add the requirements that do not come from the liability floor. The Insurance Information Institute notes that many states require medical payments or personal injury protection, or uninsured motorist coverage, as part of the mandatory package, and those requirements vary enough that they must be read from your own state’s rules rather than assumed. If your car is financed or leased, your lender will normally require collision and comprehensive coverage until the loan is paid, a requirement the NAIC shopping guide flags as standard in loan and lease agreements. Finally, list every licensed driver in your household, including students away at school. The NAIC shopping guide is explicit that household members should be insured on the policy rather than left off it, because leaving a driver off does not remove your responsibility for what that driver does. These entries are the fixed frame of the worksheet; everything after this step is the part you actually choose.

Step two: size a claim in dollars, on paper

Use labelled hypothetical figures, your own or the ones here, and do the subtraction in full. Suppose one person is seriously injured in a crash you caused, and the claim for medical care, lost wages and related costs comes to $85,000. Against a per person limit of $25,000, the policy pays $25,000 and the shortfall is $85,000 minus $25,000, which is $60,000 owed by you if you are found legally responsible. Now suppose two people are injured, each with a $40,000 claim. The combined claims are $80,000, and against a per accident limit of $50,000 the shortfall is $80,000 minus $50,000, which is $30,000. Property damage works the same way: $32,000 of damage to another car and a fence against a $25,000 property damage limit leaves $32,000 minus $25,000, which is $7,000. These are illustrations, not claim statistics, and real claims can be smaller or far larger. The exercise matters because it shows the mechanism: a limit is not tested by an average crash, it is tested by the largest claim of your driving life, and the part above the limit does not disappear.

What injuries actually cost: the federal estimate, by severity

The hypothetical claims in step two are round numbers chosen to show the mechanism. The National Highway Traffic Safety Administration publishes measured ones. Its report The Economic and Societal Impact of Motor Vehicle Crashes, 2019 (Revised), DOT HS 813 403, published in February 2023, estimates the cost of each injured person in a crash, grouped by the Maximum Abbreviated Injury Scale, or MAIS. The report describes the scale as running from 1 for minor to 6 for maximal; it calls MAIS 1 a minor injury, MAIS 2 moderate and MAIS 5 a critically injured survivor.

Two of the cost lines in the report’s Table 1-4 are the ones a bodily injury claim is built from: medical care and lost market productivity, the report’s measure of lost workplace productivity. For a person in a police-reported crash, in 2019 dollars, the two add up to $4,525 at MAIS 1, $36,365 at MAIS 2, $162,061 at MAIS 3, $418,529 at MAIS 4, $669,465 at MAIS 5 and $1,028,259 for a fatality. For a fatality, medical care is only $17,289 of that total and lost productivity is $1,010,970, which is why a death can produce a larger claim than the most severe survivable injury.

Read the figure against your own per-person limit. A minor injury averages well under any limit sold today. A moderate injury, at $36,365, already exceeds a $30,000 per-person limit by $6,365 before anything is added for legal costs or pain and suffering. A MAIS 3 injury, at $162,061, is about 5.4 times a $30,000 limit and about 1.6 times a $100,000 limit. Everything above MAIS 3 exceeds a $100,000 limit several times over. The averages are national and per person; one claim can be far above or below its group, so treat each bar as the centre of a wide range, not a price.

Two cautions keep this honest. First, these are economic costs, not court awards. A liability claim can include amounts the NHTSA economic total leaves out, such as pain and suffering, and it can also recover less, for example where fault is shared. Second, the figures are in 2019 dollars and are not adjusted here. Medical and wage levels have moved since then, so the bars are a floor for planning, not a ceiling.

How often the expensive injuries happen

A worksheet that sized every limit for the average fatality would call for more than $1 million of liability cover per person, far above the 100/300 format example used in this guide. The same NHTSA report counts how many people fell into each group in 2019, across police-reported and unreported crashes. It estimates 3,875,265 people with MAIS 1 injuries, 427,119 at MAIS 2, 141,167 at MAIS 3, 19,285 at MAIS 4 and 7,187 at MAIS 5, plus 36,500 fatalities.

Of the 4,470,023 nonfatal injuries in those five groups, 13.3% were MAIS 2 or worse and 3.8% were MAIS 3 or worse. Those shares are ClearCarRates calculations from the report’s Table 1-3. Most injuries are minor, and a limit sized only for the typical injury would rarely be tested. Liability limits exist for the uncommon claim, and the uncommon claim is where the shortfall in step two turns into a debt measured in hundreds of thousands of dollars.

The practical reading is that a limit is a choice about which tail of the distribution you are willing to carry yourself. A $30,000 per-person limit covers the average minor injury many times over and falls short of the average moderate one. A $100,000 limit covers the average moderate injury and falls short of the average MAIS 3 one. Neither limit covers the average fatality, at $1,028,259. Step three, the inventory of what you own, is what decides how far into that tail you need the policy to reach.

The federal figures run through the three numbers

Put the NHTSA averages into the three-number format the NAIC shopping guide uses, with California’s current minimum as the example floor. The California DMV lists the requirement as $30,000 for injury or death to one person, $60,000 for injury or death to more than one person and $15,000 for damage to property, citing Insurance Code section 11580.1b; the published premium averages for that state are on the California rate page, and how the floors compare across the 25 states in this index is in state minimum liability limits explained. The arithmetic below is a labelled illustration built from national averages, not a claim forecast.

Two patterns stand out. The second number in a split limit bites first when several people are hurt: two moderate injuries that each fit inside a $30,000 per-person limit can still exceed a $60,000 per-accident cap. And moving from 30/60 to 100/300 removes the shortfall for the moderate cases entirely while cutting the MAIS 3 one by $70,000, from $132,061 to $62,061. That difference is what the higher limit buys. Step five, with quotes in hand, tells you what it costs.

Now hold those shortfalls against the household inventory from step three, the labelled $150,000 of savings, investments and home equity. At 30/60, the average MAIS 3 shortfall of $132,061 would reach 88% of that inventory. At 100/300, the $62,061 shortfall reaches 41% of it. The average MAIS 4 injury is different in kind: its shortfall is $388,529 at 30/60 and $318,529 at 100/300, so at either limit it exceeds the whole $150,000 inventory, by $238,529 and $168,529. A per-person limit of $250,000 would still leave $168,529 of the MAIS 4 average uncovered, and that is the point at which an umbrella policy above the auto limits, discussed in step five, becomes a priced question rather than a theoretical one. None of this predicts a court outcome or a collection, since legal costs, pain and suffering, shared fault and state protections for some assets all sit outside the arithmetic. It does show which rung of the severity ladder your current limit and your inventory can absorb, which is the decision this worksheet exists to make.

The same report shows who pays for crashes overall, across every source of payment. NHTSA estimates that private insurers pay approximately 54 percent of all crash costs, individual crash victims approximately 23 percent, and third parties such as uninvolved motorists delayed in traffic, charities and health care providers about 15 percent in the body of the report (its executive summary says about 14), with federal revenues at 5 percent and states and localities at about 3 percent. A shortfall in your limit does not vanish. It moves into the victim’s column, and from there, through a judgment, potentially into yours.

The third number, property damage, can be read the same way. The NAIC shopping guide explains that it is the most the policy pays for any property damage you cause in one crash, regardless of the number of cars or other properties damaged. NHTSA’s Table 1-4 puts the property damage cost of a police-reported crash with no injuries at $4,556 per damaged vehicle, in 2019 dollars. As a labelled illustration, a crash that damages three vehicles at that average comes to $13,668, inside a $15,000 property damage limit with $1,332 to spare; a fourth damaged vehicle at the same average takes the total to $18,224 and leaves $3,224 above the limit. A guardrail, a storefront or a single new vehicle with expensive sensors can do the same on its own. The average is a starting point for the arithmetic, not a forecast of your crash.

Step three: list what a shortfall would be collected from

A shortfall is a debt, and debts are collected from what you have and what you earn. Make the inventory the way the NAIC framing implies: write down savings, investments and the equity in your home, then add them. A worked example with round hypothetical figures: $18,000 in savings plus $42,000 in investments plus $90,000 in home equity equals $150,000. Set that total against a per accident limit to see the planning gap in the worksheet sense: $150,000 minus a $50,000 per accident limit equals $100,000 of listed value above the limit. That comparison is a planning device, not a legal prediction. State law protects some assets from collection in some circumstances, legal costs sit outside it, and no worksheet can say what a court would do with a specific claim. What the inventory does reliably is end the habit of choosing a limit in the abstract. A driver with $4,000 of savings and no property faces the same shortfall arithmetic as a driver with $150,000 listed, but the consequences of the shortfall are not the same size, and the premium they can reasonably afford is part of the same decision.

Step four: decide the coverages that pay you

Liability coverage pays others. The rest of the worksheet covers the parts that pay you, your passengers and your car. For collision and comprehensive, the Insurance Information Institute notes that you do not choose a coverage amount in the same way: the coverage reflects the market value of your car and the cost of repairing it, and you choose the deductible, the amount you pay on a claim before the insurer pays. The working question is whether you could repair or replace the car from savings without serious harm. If you could not, dropping physical damage coverage to cut the premium moves a risk you cannot carry onto your own balance sheet; our guide on liability only versus full coverage works through that trade in full. Uninsured and underinsured motorist coverage pays when the driver who hits you has no insurance or too little, which is the mirror image of the shortfall problem in step two. Personal injury protection or medical payments coverage, where your state offers or requires it, pays medical costs regardless of fault. Read each of these as a cash question: if this event happened next month, whose money pays, and is that answer one you can live with? Whose policy answers first when a borrower drives your car is in lending your car: whose insurance pays.

Step five: price the decision with identical quotes

Only now compare prices, and compare them in a way that isolates the decision you are actually making. Take your worksheet limit, and ask for quotes at that limit and at one step above it, with every other entry identical: same drivers, same cars, same garaging address, same deductibles, same additional coverages. Record the annual premium at each limit from the quotes in front of you. The difference between those two real figures is the actual cost of the higher limit for your household, and it is the only version of that number worth using. No general percentage or typical increase is stated in this guide, because the difference is insurer specific and is knowable exactly by asking. While you are asking, ask in writing what underlying auto limits the insurer requires before it will sell an umbrella policy, and what that policy costs for you. The Insurance Information Institute describes umbrella and excess liability policies as paying when the underlying coverages are exhausted; whether one belongs in your worksheet depends on the inventory you wrote in step three and on the price you are actually quoted.

Redo the worksheet when the inputs change

This is not a once in a lifetime calculation, because every input in it moves. Redo it at each renewal as a short check of the declarations page, and redo it in full when any of these change: you move to a new state with a different floor and different required coverages; a young driver joins the household (the reporting steps are in adding a teen driver); you buy, replace or pay off a car, which changes both the lender requirement and the replacement question in step four, and whether gap coverage still has work to do; you buy a home or build meaningful savings, which changes the inventory in step three; or your state raises its minimum, as California did when it moved from the 15/30/5 floor printed on its older DMV financial responsibility notice to the 30/60/15 its DMV lists now. Between full reviews, keep the worksheet with your policy papers. When a renewal arrives with a higher premium, you will be able to tell whether the price moved or the coverage moved, and you will be changing a limit by decision rather than by drift. If any part of the worksheet turns on your personal finances rather than on insurance mechanics, take it to a licensed agent in your state or a financial adviser who knows your situation, because this guide can size the exposure but cannot decide it for you.

Common questions