What car insurance is required in most states

01Liability is the core requirement

Liability insurance pays for harm you cause to other people: their injuries and the damage to their car or property. It does not pay to fix your own car. Nearly every state builds its law around this coverage because the goal is to make sure a person hurt by your driving can be paid. When a state talks about a minimum, it nearly always means the smallest liability limits a policy may carry and still be legal.

02Reading the split-limit numbers

Minimums are usually written as three numbers, such as 25/50/25. The first is the most the policy pays for one injured person, in thousands of dollars. The second is the cap for all injuries in a single crash. The third is the cap for property damage. So 25/50/25 means $25,000 per injured person, $50,000 per crash for injuries, and $25,000 for damage to cars, fences and anything else you hit. Some insurers also sell a single combined limit instead of three separate figures.

03Injury protection in no-fault states

Roughly a dozen states use a no-fault system for injuries. In those states each driver's own policy pays the first share of their injury costs and lost wages, whoever caused the crash, through personal injury protection, often shortened to PIP. Florida, Michigan, New York, New Jersey and Pennsylvania are well-known examples, though the rules and the amount required differ widely. A few other states require a smaller payment coverage for injuries without the full no-fault system.

04Uninsured and underinsured motorist rules

About twenty states plus the District of Columbia require uninsured motorist coverage, which pays for your injuries when a driver with no insurance hits you. Some also require underinsured coverage for when the other driver carries too little. In many other states insurers must offer it, and you have to turn it down in writing if you do not want it. Because so many drivers on the road carry no insurance at all, this is one of the most useful coverages a policy can hold.

05The states that do things differently

New Hampshire does not require most drivers to buy car insurance, but drivers who cause a crash must show they can pay for the harm, and the state can demand insurance afterward. Florida has long been an outlier in another way: it requires PIP and property damage liability, yet for most drivers it does not require bodily injury liability. These rules are revised now and then, so confirm the current version with your state's insurance department or motor-vehicle office before you lean on any short recap.

06Worked example: reading one state's minimums

Imagine a state whose law reads 30/60/15 with uninsured motorist coverage required at the same injury limits. Dana's policy shows liability of 30/60/15 and uninsured motorist of 30/60. That means up to $30,000 for any one person she injures, $60,000 for everyone injured in one crash, and $15,000 for property she damages. If an uninsured driver injures Dana, her own policy pays up to $30,000 for her injuries. Her policy is legal, but notice that $15,000 is well under the price of most newer cars on the road.

07What happens if you drive uninsured

Penalties depend on the state but commonly include fines, suspension of your license or registration, a fee to reinstate them, and in some places impound of the car. Many states also require a special insurance filing for several years afterward, which usually raises the price of coverage. The larger risk is personal: if you cause a crash with no insurance, the injured people can come after your savings and future wages.

08Moving to another state

When you move, your old policy follows the rules of your old state, so you will need to update or replace it. Most states expect you to insure and register the car at your new address within a set window, commonly thirty to sixty days. Check whether your new state requires PIP or uninsured motorist coverage that your old one did not, because a policy that was legal at the old address can fall short at the new one.

09Insurance follows the car, mostly

In most states the owner's policy is the main coverage for a car, and it usually extends to someone who borrows the car with permission. The driver's own policy may add a second layer if the owner's limits run out. Because of this, a person who owns a car must keep it insured even if someone else drives it most of the time. Tell your insurer about regular drivers in your household so the policy matches how the car is really used.

At a glance

Key terms

Split limits

Three separate caps: per person, per crash, and property.

No-fault

A system where your own policy pays your first injury costs.

PIP

Personal injury protection; pays your injury costs and lost wages.

Uninsured motorist

Coverage for when an at-fault driver has no insurance.

Declarations page

The summary page that lists your coverages and limits.

Rejection form

The signed paper used to turn down an offered coverage.