Car Insurance Laws: A Comprehensive Guide (2025)

All states require some form of car insurance or proof of financial responsibility.

Car insurance is not just an additional expense; it protects you, your family, and your vehicle in case of an accident or damage. Each state has its own minimum liability limits.

The minimum liability limits refer to the minimum amount of insurance coverage that a driver is required to have in order to legally drive in a particular state. Liability insurance is designed to protect other drivers and property owners in the event that you cause an accident. The limits are expressed in three numbers, for example, 25/50/25. The first number refers to the maximum amount of coverage for bodily injury per person, the second number refers to the maximum amount of coverage for bodily injury per accident, and the third number refers to the maximum amount of coverage for property damage per accident.

For instance, if a state requires a minimum of 25/50/25, this means that you must have at least $25,000 in coverage for bodily injury per person, $50,000 in coverage for bodily injury per accident, and $25,000 in coverage for property damage per accident. It’s important to note that these are only minimums and you may want to purchase additional coverage depending on your specific needs.

Look at your state’s requirements in the following table.

Liability Car Insurance Minimum Requirements by State

Understanding Car Insurance Laws by State

Common Types of Car Insurance Coverage

The following coverages are typically required by state car insurance laws:

Bodily Injury Liability

This coverage is for injuries caused by you, the designated driver, or the policyholder to someone else. It also covers you and your family members when driving another person’s car with their permission.

Medical Payments or Personal Injury Protection (PIP)

Medical coverage is typically required to pay for the treatment of injuries to the driver and passengers of the policyholder’s car. PIP may also cover medical payments, lost wages, or other costs resulting from an accident.

Property Damage Liability

This coverage pays for damage caused by you or someone driving your car with your permission to another person’s property. Examples include damage to vehicles, lamp posts, telephone poles, fences, buildings, or other structures.

Collision Coverage

Collision car insurance protects your car in the event of a crash with another vehicle or object, or if your vehicle flips over. It may also cover damage caused by potholes in the road.

Comprehensive Coverage

Comprehensive car insurance reimburses you for loss due to theft or damage caused by non-collision events, such as fire, falling objects, earthquakes, windstorms, hail, floods, vandalism, or contact with animals. States do not require you to purchase collision or comprehensive coverage, but lenders may require it if you have a car loan.

Uninsured and Underinsured Motorist Coverage

This coverage reimburses you, a family member, or a designated driver for damages incurred if hit by an uninsured or hit-and-run driver. Underinsured motorist coverage applies when an at-fault driver does not have enough insurance to cover your total loss. It may also protect you if you are hit as a pedestrian.

Meeting Your State’s Car Insurance Requirements

To ensure compliance with your state’s car insurance laws, obtain a quote or work with a local insurance agent to verify that you have the appropriate level of coverage. Remember that insurance terms, definitions, and explanations are for informational purposes only and do not replace or modify the information contained in individual insurance contracts, policies, or declaration pages. Coverage availability and terms may vary by state, and exclusions may apply.

Additional Factors to Consider in Car Insurance Laws

Besides the primary types of car insurance coverage, there are other factors to consider when selecting a policy. These factors may affect your premium and overall coverage.

Deductibles and Policy Limits

When choosing an auto insurance policy, pay attention to the deductible and policy limits. The deductible is the amount you agree to pay out-of-pocket before your insurance kicks in, while the policy limit is the maximum amount the insurance company will pay for a covered claim. Higher deductibles typically result in lower premiums, but you should ensure that you can afford the deductible in case of an accident.

Discounts and Savings Opportunities

Many insurance companies offer car insurance discounts and savings opportunities to attract customers and reward responsible behavior. These may include good driver discounts, multi-policy discounts, and safety features discounts for features installed in your vehicle. Research and ask your insurance agent about available discounts to help reduce your premium costs.

Regularly Reviewing Your Coverage

As your life circumstances change, so do your insurance needs. Regularly reviewing your car insurance coverage ensures that it remains relevant and adequate. Life events such as moving, buying a new car, or adding a driver to your policy can all impact your coverage and premium. By reviewing your policy annually or after major life events, you can ensure that your car insurance is up to date and provides the protection you need.

Final Thoughts on Car Insurance Laws

Understanding car insurance laws and requirements in your state is crucial for ensuring that you have the right level of coverage. Familiarize yourself with the common types of car insurance coverage, consider factors such as deductibles and discounts, and regularly review your policy to make sure it meets your needs. Work with a local insurance agent or obtain a quote online to find a policy that best suits your circumstances and complies with your state’s car insurance laws.