How much car insurance coverage do I need?
Updated September 10, 2026 . AmFam Team
Whether you’ve been driving for decades or you’re newly licensed, car insurance is one of those “set it and forget it” decisions that’s worth revisiting. The big question is: How much auto insurance coverage is enough?
The honest answer is: It depends—on your vehicle and finances, how much risk you’re comfortable with, and the level of protection you want for your assets. If you’re found liable for an accident, having the right liability limits can help protect your savings, home, and other assets. And if you want broader coverage beyond your auto policy, umbrella insurance may be worth considering.
Below, we’ll walk through common coverages and a few practical questions to help you choose limits that feel right for you.
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Common types of auto insurance coverages
Most states have minimum auto insurance requirements, but minimum limits may not be enough to financially protect you in the event of an accident. Understanding what each coverage does can help you choose limits more confidently.
Let’s take a look:
Liability coverage
If you cause an accident, there are two main types of costs you may be held responsible for—bodily injury and property damage.
Bodily injury liability coverage: This coverage may help pay for injuries to others if you’re at fault in an accident. It can also help protect you if you’re sued. Medical bills and legal costs can add up quickly, so higher limits can provide a financial safety net and extra peace of mind.
Property damage liability coverage: This coverage may help pay to repair or replace someone else’s property, like a vehicle or a fence, that you damage in an accident. It may also cover loss of use—for example, the other driver’s rental car costs while their vehicle is being repaired or replaced, depending on the claim and policy terms.
An example of liability limits on an auto policy might look like this: 250/500/250. These examples can help you evaluate what is a good amount of car insurance coverage for your situation.
- $250,000 bodily injury (per person)
- $500,000 bodily injury (per accident)
- $250,000 property damage (per accident)
Coverage tip
Liability coverage is an important way to help protect your finances, regardless of your state or the type of vehicle you drive. And to feel more confident, some drivers choose to add umbrella insurance for an extra layer of financial protection beyond their auto policy limits.
Comprehensive and collision coverages
While not mandated by states, comprehensive and collision coverages are needed or wanted by most drivers. In addition, if you have a lease or loan on your vehicle, your lender may require them. When comparing collision vs. comprehensive coverage, it’s important to remember that both help protect your vehicle but cover different types of damage.
Comprehensive coverage
Comprehensive coverage is optional and helps cover damage from events that don’t involve colliding with another vehicle or object. You usually choose a comprehensive deductible, which is the amount you pay out of pocket before coverage applies.
This coverage may help pay for damage caused by:
- Theft
- Hitting an animal
- Vandalism
- Fires or explosions
- Hail
- Certain natural disasters
- Certain falling objects
Collision coverage
Collision insurance is optional and helps pay to repair or replace your car if it’s damaged in a covered accident, whether it’s your fault or not. Collisions involve anything from hitting another vehicle to hitting an object, like a tree, guardrail, or mailbox. You’ll typically pay a collision deductible, and then your insurer helps cover the remaining eligible damage.
Uninsured and underinsured motorist coverage
Some states require one or both of these coverages, and other states offer them as optional.
- Uninsured motorist coverage may help protect you if you’re hit by a driver who doesn’t have insurance.
- Underinsured motorist coverage may help if the at-fault driver’s insurance limits aren’t high enough to cover your expenses.
Without uninsured and underinsured motorist coverage, you could be left paying more out of pocket after an accident.
Additional car insurance coverage options
Depending on your situation, these optional coverages can help fill common gaps:
Gap insurance: If your car is totaled in an accident, your regular auto insurance may pay up to the vehicle’s actual cash value. If you owe more than that amount on your lease or loan, loan or lease assistance coverage can step in to help cover the difference.
Roadside service: If you get stuck on the side of the road, emergency roadside service can help. Coverage may include services like towing, battery jumps, fuel delivery, locksmith services, labor and certain roadside repairs, subject to your policy terms.*
Rental car coverage: If your car isn’t drivable due to a covered loss, rental car reimbursement coverage may help pay for a rental car, up to the limit you choose.**
How to choose car insurance coverage
Start with the car insurance requirements in your state, but remember: minimum recommended car insurance coverage amounts may not provide the financial protection you need. If your state requires $15,000 in property damage liability and you total a $40,000 vehicle, you could be responsible for the difference.
Here are a few helpful questions to guide your decision:
- Do you have a lease or loan? If you do, your lender will likely require comprehensive and collision coverage. You may also want to consider gap lease/loan coverage if you owe more on your vehicle than what it’s worth.
- How much liability coverage can you afford? Liability coverage helps protect your assets, like your home, savings, and future income, if you’re responsible for an accident. Many drivers choose the highest liability limits they can comfortably afford.
For additional liability protection, consider adding an umbrella policy. It can provide additional liability coverage that goes beyond the limits of your underlying policies, like auto and homeowners. For instance, if you’re in an accident and a large claim exceeds your auto liability limits, umbrella coverage may help cover remaining eligible costs, up to your policy limit.
- Do you have a teen or new driver in the household? Newer drivers may have a higher risk of getting into an accident. If you’re adding a teen driver, you may want to consider higher liability limits to help financially protect your household.
- What is your car worth and what could you pay out of pocket? If you own your vehicle outright, collision and comprehensive coverage may be optional. Some drivers choose to keep these coverages for peace of mind; others drop them when the vehicle’s value decreases—but remember, this can put your financial future and personal assets in jeopardy.
Here’s a practical way to think about it: Liability insurance helps cover damage or injuries you cause to others, but it doesn’t pay to repair or replace your own vehicle. So, if your vehicle were totaled tomorrow, would you be comfortable paying out of pocket to replace it without help from insurance?
- Do you live in an area prone to severe weather? If hail, flooding, wildfires, and other severe weather is common where you live, comprehensive coverage can be especially valuable.
Want the best coverage for your situation? Talk to an agent.
Like many people, you may still be asking, “What kind of car insurance coverage do I need?” American Family is here to help. Connect with an agent today to compare options, choose limits, and build a policy that fits your needs.
Prefer to manage details on-the-go? With the MyAmFam app, you can access proof of insurance and manage your account—anytime, anywhere. It’s a convenient way to protect the things that matter most.
This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.
*Availability varies based on the way you purchase insurance and by state. Limits and exclusions apply. Refer to your policy or talk to your agent for details.
**Daily allowances or limits may vary by policy. Exclusions may apply.
